However, elements of joint liability have also increasingly been introduced as part of these measures, while fiscal policy has remained a matter for national policymakers. Hence, there is a growing divide between liability and control, which can lead to growth in incentives for government borrowing.
A frequently suggested solution to these euro-area stability problems is the introduction of a fiscal union with centralised intervention rights at the European level and joint liability. This is not a fundamentally new idea. Addressing the Bundestag in November 1991, for example, the then-Chancellor Helmut Kohl remarked that “the idea of sustaining economic and monetary union over time without political union is a fallacy”.