Felix Salmon is worried about the eurozone:
Will Greece be giving up fiscal independence in return for bailout funds or German guarantees? I’m sure it’ll agree to stringent conditions, while claiming that it would have kept to such a plan in any case. The question is what happens when — inevitably — it ends up breaking its fiscal promises, or trying to play silly games to get around them. What will Germany be able to do, in that case, to snap Greece back into line? And do the Germans really want to play the role of Europe’s fiscal disciplinarian in any event?
It probably doesn’t matter: Greece is the Bear Stearns of Europe, seemingly too big to be allowed to falter or default, and therefore it must be bailed out somehow. Of course this sets an important precedent for when Spain and/or Italy find themselves in a similar situation — and it’s likely to make countries like Latvia feel a bit miffed, seeing how much fiscal pain they’ve inflicted on themselves with no bailout to show for it at all. The hazard here is that countries, seeing the Greek precedent, refuse to take tough fiscal steps unless the path is sweetened by Germany and France. This isn’t the end of the euro crisis: it’s only the beginning.
That is one hazard. But there is an opposite hazard as well: one of the primary selling points for eurozone members is that their interests will be well-served by a credible, independent central bank. The past two years, however, have illustrated the downsides of a monetary union that is committed to low inflation above all else. Some states in the eurozone clearly need monetary expansionism and currency depreciation to get their economies back on track, but those policy tools have been removed from them.
If the major states (Germany and France) in the monetary union insist on maintaining the policies that benefit them even if they harm other members, but then also refuse to fulfill the "lender of last resort" obligation of a regional monetary hegemon, then the credibility of the union is called into question. And if the major European states keep pawning off their troubled states onto the IMF, they risk drawing the ire of the U.S., Japan, and other major contributors to the IMF. What would Frankfurt say if the U.S. took IMF funds to bail out California?
So Germany and France must simultaneously reassure member states that they will be well-served by the union when they need it the most, without writing a blank check that could encourage moral hazard. It's a very fine line that the ECB hasn't had to walk before; we'll see in the coming year how good their tightrope act is.