For example, if a particular state of the US were to experience a significant build-up of private debt that would threaten their local banks, the responsibility for its recapitalisation and deposit insurance would be borne by the federal government, through institutions like the Treasury Department and the Federal Deposit Insurance Corporation.
This means that a US state cannot get into financial difficulties because of a mismatch between the size of its banking sector and the size of its local economy, while in the euro area this can occur. The absence of these kind of federal institutions in Europe is a source of vulnerability.