The sovereign debt crisis is due to two major flaws of the euro area’s architecture: a doomed approach to fiscal discipline and the lack of a banking union. Adopting a complete banking union has always been a requirement and is now urgently needed. The continuous additions of measures designed to strengthen the Stability and Growth Pact (SGP) will fail because this centralised approach is incompatible with budgetary sovereignty. The decentralised approach requires an unbreakable commitment to the no-bailout rule. The other proposals are not justified by economic principles. They may be justified by a political vision, we need more Europe. The timing of this proposals is worrisome, however, as we face a previously unheard loss of public trust in the European institutions.
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