The dramatic waning of enthusiasm for reform on the part of the Berlusconi government following SMP purchases of Italian government bonds shows how quickly a country’s will to reform can evaporate when budget constraints are eased. Third, the Eurosystem lacks the legitimacy to redistribute fiscal risks between member states. This should remain within the remit of parliaments and governments in the various euro-area countries.
But then such redistribution is precisely what would ensue if, say, the Eurosystem were to grant loans to individual euro-area countries.