financial support to member countries lacks credibility. Some form of fiscal risk sharing is indeed better than none, especially … in presence of increasing sovereign default risk of some EU member countries. The moral hazard created by risk sharing …, depends on its costs. When these are low, risk sharing and delegation are substitutes and it is optimal to opt for high …

Systemic risk remains a major concern to policymakers since widespread defaults in the corporate and financial sectors … could pose substantial costs to society. Forward-looking measures and/or indicators of systemic default risk are thus needed … systemic default risk indicators using the information embedded in single-tranche standardized collateralized debt obligations …