As such, there is no credit risk attached to sovereign bonds, although they may still carry inflation risk if the central bank is pressured by the government into financing inflationary deficits. In the euro area, however, the same institutional relationships cannot apply.
There is one central bank and nineteen different fiscal authorities, the member countries do not assume responsibilities for each other’s debt, and the European Central Bank (ECB), for very good reasons, is forbidden by the Treaty from “monetary financing” – which means purchasing directly the debt of governments or directly lending to them.