However, in this framework, mutual assistance must be granted only as a last resort, must be strictly conditional and must involve considerable interest rate premiums, in order to give countries an incentive to balance their government budgets. 3.3  Financial market reform as a necessary addition  National fiscal policymakers are ultimately responsible for convincing market participants to invest in their sovereign bonds.
What started as a liquidity crisis in the money market in 2007 quickly morphed into a full-blown financial crisis following Lehman’s collapse in autumn 2008, and finally into a sovereign debt crisis starting in May 2010.