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. Fiscal and economic policies, on the other hand, essentially remained a national prerogative, though the fiscal rules have admittedly been adapted.
As a result, the balance between liability and control has been thrown out of kilter. However, striking an even balance between liability and control is crucial for the functioning of EMU – and that’s a point I made in my last speech in Amsterdam 2½ years ago.