Stability Bonds would make the euro-area financial system more resilient to future adverse shocks and so reinforce financial stability. Stability Bonds would provide all participating Member States with more secure access to refinancing, preventing a sudden loss of market access due to unwarranted risk aversion and/or herd behaviour among investors. Accordingly, Stability Bonds would help to smooth market volatility and reduce or eliminate the need for costly support and rescue measures for Member States temporarily excluded from market financing. The positive effects of such bonds are dependent on managing the potential disincentives for fiscal discipline. This aspect will be.
