Excessive liabilities, even if supported by the market, imply a transfer of wealth from future generations to the current ones – a move that is decided unilaterally by the current generation. Seen from this perspective, fiscal constraints on governments do not appear as a loss of sovereignty but rather as the condition for preserving this very sovereignty over time.
Likewise, stronger prudential rules are not a restriction on credit for productive investment, but a check on excessive risk-taking that would otherwise lead to financial instability. On the fiscal front, effectively balancing the social contract between generations means creating room for stabilising policies in future downturns and protecting the coming generations by forcing the distributional debate to take place in the present.