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A mechanism for a transfer union, the euro zone

Comments on KarenMaley "Will Merkel snap the olive branch?" 24/08/2011, http://www.businessspectator.com.au/bs.nsf/Article/Angela-Merkel-Greek-bailout-eurozone-debt-crisis-m-pd20110824-KZU3L?OpenDocument&emcontent_Maley&src=rot

Well, there should be some risk premium to be paid by higher risk members to lower risk members to reflect different levels of sovereign risks among the euro members, and as a measure of discipline for any careless and or imprudent policies by certain members.

It would also alleviate the concerns of lower risk and more prudent members, and as a reward or as a guarantee to them so that they will not completely sacrifice themselves for any imprudent members.

Of course, the premium paid by any member should be smaller than what it could get from capital markets for the mechanism to work effectively and in every member's interests.

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