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Debt mutualisation, inflation and populism in the Eurozone

This paper summarises the main options that literature and policy makers have explored to implement common debt issuance in the Eurozone. It describes the role that monetary policy is playing as a fiscal tool and why it is not sustainable due to the limitations that inflation and populism impose on political stability and debt sustainability. The current economic and institutional environment requires some form of debt mutualisation to avoid the reappearance of sovereign crises. The balance between monetary normalisation and debt mutualisation should allow a soft transition from ECB’s sovereign interventions to some form of fiscal solution ‘from the centre’.