In a functioning monetary union of sovereign states, a government crisis in one member state should not have far-reaching consequences for the partners.
This statement does not apply to the European Monetary Union of 2022.
The sharp 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 across Europe indicate a nervousness that is likely to increase significantly now that Prime Minister Mario Draghi's term in office has come to an early 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.
The hope for such a policy was more tied to Draghi's reforms than to 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.