Debt mutualisation can be devised to stop short of a permanent transfer union.
One reason why so many Germans oppose debt mutualisation is because they (wrongly) imagine the euro could survive without it.
We have long argued that the single currency needs a lender of last resort, a banking union and limited debt mutualisation.
And the ECB may have brought Europe one step closer to debt mutualisation, prompting a narrowing of the spread between the borrowing costs of Germany and the periphery.
This is still a long way from the partial debt mutualisation that the euro zone needs, but it marks a step forward from Germany's exclusive obsession with fiscal austerity.
Germany, which is holding a crucial parliamentary election in September -- which Chancellor Angela Merkel's ruling Christian Democrats (CDU) are expected to win -- is resisting any form of debt mutualisation.
But his refusal to countenance structural reform of any sort would surely make it harder for him to persuade Mrs Merkel to tolerate more inflation or consider some form of debt mutualisation.
The biggest risk associated with this scenario is that the moves towards debt mutualisation and a banking union might not, after all, be enough to stabilise the remaining euro area, resulting in a total break-up of the euro zone and triggering a savage recession with hugely damaging economic consequences.
Such a move would of course come as a tremendous shock, and it would be essential to protect Italy and France at once by making far-reaching concessions that shift the remaining euro area towards mutualisation of debt and the creation of a banking union.
And since the mutualised debt would have to become a national responsibility again after 25 years, it might actually make the long-term mutualisation of eurozone debt harder to achieve.
And when we talk about "mutualisation" of eurozone sovereign debt, that's a euphemism for Germany underwriting all eurozone nations' debt - and it seems unlikely that, when put that way, the German people will find that more appealing than a plate of cold sick.
The necessary steps would also involve full "mutualisation" of eurozone sovereign debt, the pooling of sovereign liabilities, which would permit the European Central Bank to be the lender of last resort to the currency union - and give the eurozone the kind of protection against the risk of default that the UK and the US have.
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