However, to me there seems to be more truth in this view than in many so-called “solutions” implying ever-increasing unconditional financial “assistance”. Many of these proposals ignore moral hazard implications and might therefore simply postpone solutions. They might even increase the problems they are meant to tackle in the long run. Financial assistance is necessary to buy time – nothing more and nothing less.
It cannot be a long-term solution. Such a long-term solution can only be achieved through fiscal consolidation and structural reforms. As with banks, we cannot ignore or deny the systemic importance of certain countries within the euro area. And in the same manner, it is vital to ensure that politicians cannot use this status to delay necessary steps simply because these steps are unpopular.