Moreover, the acknowledgement of sovereign debt restructuring as a real possibility requires deeper reflections on sovereign debt restructuring mechanism for the euro area and would underpin the credibility on of the no bailout clause. As experience has shown, “the constructive ambiguity” with respect to the market interpretation of the no bailout clause embedded in the Treaties has not really been effective.
The ESM could play a larger role in this respect. Capital Markets Union is a natural complement to the Banking Union. It aims at promoting financial integration and enhancing shock absorption via financial markets by facilitating private risk-sharing whilst reducing opportunities for regulatory arbitrage. CMU should also support the smooth and homogenous transmission of monetary policy.