In updating their latest Commentary following the newly created €600 billion European Stabilisation Mechanism, Daniel Gros and Thomas Mayer propose that this new initiative should be transformed into an institution that could play a key role in the euro area’s evolving fiscal policy and in organising the smooth insolvency of member states where an austerity programme fails.

Daniel Gros is Director of the Centre for European Policy Studies. Thomas Mayer is Chief Economist with Deutsche Bank London.