21 Of course, the member countries are also fiscally linked through joint ownership of the ECB, in addition through the common budget of the European Union. Since borrowing and lending at the national level should be sufficient to absorb typical cyclical shocks, the primary value of an area-wide risk sharing mechanism would be in relation to unusually large and persistent shocks.
An important collective benefit from a CFC is that it would put less cyclical pressure on fiscal resources during a sharp downturn, which in turn would make it less likely that ESM assistance would need to be invoked. Such public risk sharing would be additional to the private risk sharing that is obtainable by extending the degree of cross-border equity positions across countries.