Nonetheless, it is crucial to ensure that the specific design of the support mechanisms does not discard key basic principles – such as subsidiarity, independent national responsibility for fiscal policy and the no bail-out principle, and thus also the disciplining function of the capital markets – under the smokescreen of financial stability.
This would risk further increasing the euro-area countries’ propensity to incur debt and heightening the pressure on the single monetary policy to adopt an accommodative stance. I am therefore rather critical of some elements of the decisions taken by the euro area’s heads of state and government on 21 July.