In a functioning monetary union of sovereign states, a government crisis in one member state should not have far-reaching consequences for the partners.
For the European monetary union of the year 2022, this statement does not apply as soon as the government crisis takes place in Italy.
The strong rise in Italian bond yields on Thursday, the accompanying devaluation of the euro on the foreign exchange market and the sharp fall in share prices throughout Europe indicate a nervousness that is likely to increase significantly if Prime Minister Mario Draghi's term of office is terminated prematurely in the coming days or weeks should come to an end.
Given that interest costs for the budget are still acceptable and that the bonds in circulation have an average term of seven years, Italy's national debt would be bearable if long-term policies were pursued in this by no means poor country that gave anemic economic growth a boost.
Hopes for such a policy are more likely to be associated with Draghi's reforms than with a government of politicians who believe growth will come from further public debt expansion, relentlessly funded by the European Central Bank.
The rising bond yields are a clear signal that private investors are not willing to reward such political adventures by buying low-interest bonds.
However, high yields on their government bonds are likely to be unacceptable for any government in Rome – as are European aid programs linked to economic policy conditions.
This puts the ECB in an awkward position, especially since it is preparing to present a program in which it wants to prevent undesirably large yield differences between euro government bonds by buying bonds.
This program should not be construed as a free pass for government funding.
Whenever the ECB wanted to react to every government crisis in Rome by buying Italian bonds, it finally made itself the bailiff of national politicians.