Unfortunately, these safeguards failed to prevent public debt from ballooning in some euro-area countries. The crisis played a role in this, but so did the fact that the fiscal rules were repeatedly violated and the capital markets didn’t sanction these breaches because the no-bail-out clause lacked credibility.
When doubts about the debt sustainability of some euro-area member states surfaced during the sovereign debt crisis, the urgently-taken rescue measures helped to prevent the crisis from escalating. But they did so by mutualising fiscal liability on a substantial scale. Economic and fiscal policies, on the other hand, essentially remained a national prerogative, though the fiscal rules have admittedly been adapted.