While this problem is most pressing in the euro area, it is also relevant for other countries; fiscal dominance is no longer a mere theoretical notion but a real threat. This was forgotten during the Great Moderation but has now become a highly relevant issue. The world over, awareness of the urgent need for fiscal consolidation has increased.
However, confidence in the sustainability of public debt will only stay firm, let alone be restored where it is at stake, if this awareness quickly translates into credible and ambitious steps to cut expenditure or raise revenue.