Will the reform of the institutional framework restore fiscal stability in the eurozone?

The key challenge for the fiscal reform of the eurozone is not better fiscal policy coordination or supervision. It is this: • Make sure that the financial sector can absorb a sovereign bankruptcy without a financial meltdown. This requires much tighter regulation, more effective supervision, continued access of banks to ECB refinancing in the event of a sovereign restructuring. For a transitional period, this also requires an ESM type 'rescue' institution. • The current fiscal reform package fails to deliver this.