Monetary union, therefore, holds incentives for an individual member state to run up higher debt as the negative effects of greater indebtedness – meaning higher borrowing rates – are partly borne by the other member states. This can be compared with the overfishing of the seas as it, too, affects both the community of neighbouring countries as well as the country causing the problem.
The architects of monetary union were well aware of the problem of incentives. Which is exactly why they took precautions. It was, therefore, laid down from the start in the Treaty of Maastricht that a country is forbidden from assuming the debt of another country or the community of states. In other words, this laid down the foundation for a general no bail-out principle.