All successful and stable monetary unions have genuine fiscal instruments, built on strong legal and market-based mechanisms ensuring fiscal discipline at the state level. Such an instrument should not replace national policies, but it will need to be large enough to complement them effectively. A common safe asset The third instrument required is a common safe asset.
A joint fiscal capacity and a safe asset can go hand-in-hand. But they do not need to. [25] A safe asset would fix many of the remaining euro area faultlines.