For countries that pursue sound policies, this would mean declining risk premiums, while unsustainable policies would be sanctioned. And, as a last resort, a sovereign debt restructuring would be possible without bringing down the financial system. However, changes are in order not only with regard to the capital regulation of sovereign bonds.
In a framework of individual responsibility, we need to make sure that responsibility rests with those who assumed the risks in the first place. As it is, a member state that loses market access can apply for an ESM rescue programme that combines financial assistance with economic reforms.