In my view, this way of striking a balance between control and liability is not a model which can be transposed to the euro area. But its general thrust does point the way. Referendums are not the only instruments which Swiss cantons and local governments use to strike a balance between control and liability.
Another crucial element in their fiscal policy toolkit is the no bail-out regime for local governments.2 But up until ten years ago, no one was quite sure whether a canton really was exempt from the obligation to bail out an insolvent municipality within its jurisdiction.