Imagine that the state of New York would have had to provide the guarantees to Citigroup. Think about how the markets would have treated these states? And how they  1  2  M. Monti and S. Goulard, Democracy in Europe (2012). BIS central bankers’ speeches  would have treated these banks?
The lesson for the euro area is clear: federal institutions can prevent local crises from becoming systemic. In Europe, we do not yet have these federal institutions that can act as shock absorbers. So far, responsibility for dealing with bank problems lies exclusively with the individual EU countries.