Quoting Thomas Palley, New American Fund
"High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email firstname.lastname@example.org to buy additional rights. http://blogs.ft.com/economistsforum/2011/12/the-euro-lacks-a-government-banker-not-a-lender-of-last-resort/#ixzz1gF4NRYkn
The solution is to create a European Public Finance Authority (EPFA) that issues collectively guaranteed debt on behalf of eurozone governments which the ECB is allowed to buy. That would enable the ECB to manage governments’ interest rates via open market operations, as does the Federal Reserve and Bank of England. Proceeds from EPFA debt issues would be distributed to countries on a per capita basis so that national governments would control all spending decisions. Country liability for EPFA debt would also be on a per capita basis, and EPFA decision-making would be governed by member countries with voting rights again granted on a per capita basis. That would render EPFA democratic.
The critical feature is that EPFA’s power to issue debt would be used immediately to finance the rollover of existing debt at lower rates, and it would also be used on a permanent basis to finance current and future budget deficits. An EPFA would therefore be a solution to both the current crisis and to the euro’s design flaw outlined above."
This suggestion is equivalent to my proposed zero-interest public debt issued in severe recessions. If the ECB returned the interest it earns to the borrowers, It amounts to zero-interest debt. I know this is radical, but only a big change will do.