The European debt crisis Given the fact that monetary policy has been fully stretched, it is crucial that governments take their responsibilities to tackle the root causes of the sovereign debt crisis. To this end, Europe and the IMF established the European Financial Stability Facility (EFSF), an ultimate safety net that could be resorted to if needed, as Ireland did in November.
It is important that governments keep improving the EFSF in terms of both quantity and quality, meaning maximum flexibility in the intervention of the EFSF. To be effective in supporting market confidence and prevent a further escalation of the crisis, a convincing increase of the level of available capital in the EFSF is desired.