This demand will no doubt sound extreme and misguided, particularly since it is a violation of the European treaties. However, it underscores the fact that the fundamental danger of ﬁscal dominance should not be ignored. When two parties are wrestling for the upper hand, game theory can model a variety of interactions.
Such a safety margin is desirable, as the event of hitting the zero lower bound is linked to a diminished effectiveness of monetary policy and a higher risk of a deflationary spiral. The Japanese experience of protracted financial and monetary instability, however, can not be directly transposed to the euro area.