could be aligned. but this would require a quantum leap in terms of ceding sovereignty to the european level, a leap neither the electorates nor the governments of the member states seem willing to take. if a true fiscal union that requires extensive changes to the european treaties is not on the cards, then we need to take the second avenue. that implies taking concrete steps towards restoring a balance of individual control and individual responsibility within the existing maastricht framework. a framework which is in line with what margaret thatcher once said in her famous speech at the college of europe – that improving the workings of the european union does not automatically require stronger centralisation. individual responsibility requires that sovereigns, banks and investors bear the consequences of their decisions. this means that it is primarily up to the respective government and its citizens to come up with the revenue needed to repay public debt. this holds, in particular, since high levels of public debt often go hand in hand with substantial private assets. but it also implies that the risk of non - repayment ultimately lies with the investors, since they are the ones who reap the return when things go well. and if the fiscal limit has been reached for real, public debt needs to be restructured without posing a systemic threat to financial stability. the introduction of collective action clauses into sovereign bonds was a first step in that direction. but more steps are needed. the bundesbank has put forward a proposal for sovereign bonds to include an automatic maturity extension of three years in case a sovereign accesses the european rescue mechanisms. this automatic maturity extension would allow the sovereign in question to tackle its fiscal challenges while preventing investors from bolting. the amount of official financial support would be reduced, and time could be bought to figure out if the problem is one of temporary illiquidity or insolvency. but ultimately, all these questions boil down to the quip of american economist allan meltzer : “ capitalism without failure is like religion without sin. it doesn ’ t work. ” for the above proposals to work, we need to make sure that sovereign insolvencies are possible without bringing down the financial system as a whole. bis central bankers ’ speeches to that end, doing away with the preferential treatment of sovereign debt in banks ’ balance sheets is of the essence. the current regulatory framework permits preferential treatment of sovereign exposures in various forms. while bank exposures to a single counterparty are limited, in principle, to a quarter of their eligible capital

however, the picture looks different. mark - ups are higher, on average, than in the us. it is probably safe to say that the services directive has fallen short of expectations. britain, in particular, with its advanced services sector stands to gain from dismantling the existing barriers to cross - border trade in services. originally, the services directive was designed to establish the so - called “ country of origin principle ” that already holds for eu trade in goods. this principle states that a services firm should no longer be hampered by regulation in the import country if it has already complied with the national regulations in its home country. however, the final version of the directive did not include this principle. simulations carried out by the netherlands ’ bureau for economic policy analysis 6 show that by dropping it, the expected output boost as a result of the services directive is reduced by some 40 %. completing the single market for services therefore holds the promise of substantial economic gains. badinger, h. ( 2005 ), “ growth effects of economic integration : evidence from the eu member states ”, review of world economics 141, 50 – 78. nauro f. campos, fabrizio coricelli, luigi moretti ( 2014 ), “ economic growth and political integration : estimating the benefits from membership in the european union using the synthetic counterfactuals method ”, iza discussion paper no. 8162. boltho, andrea and eichengreen, barry ( 2008 ), “ the economic impact of european integration ”, cepr discussion paper no. 6820. john springford, simon tilford, philip whyte ( 2014 ), “ the economic consequences of leaving the eu ”, the final report of the cer commission on the uk and the eu single market. g. ottaviano et. al. ( 2014 ) the costs and benefits of leaving the eu, cep discussion paper. roland de bruijn, henk kox, arjan lejour ( 2008 ), “ economic benefits of an integrated european market for services ”, journal of policy modeling 30, 301 – 319. bis central bankers ’ speeches the same goes for bringing the single market into line with the digital age. when it comes to the digital economy, fragmentations still abound, in particular with regard to legal issues such as privacy and data protection, content and copyright, liability of online intermediaries, e - payments and electronic contracts. the eu is still comprised of 28