EMU and the loss of monetary sovereignty

Deborah Mabbett and Waltraud Schelkle have written an interesting short piece on EUROPP analysing the arguments, made by Paul De Grauwe among others, that the crisis of EMU is fundamentally due to the loss of monetary sovereignty: Spanish sovereign debt is problematic, in that perspective, because the Bank of Spain is no longer in a position to bail out the Spanish government if necessary. That increases the risk of a default relative to, say, the UK where the Bank of England can (and did) print money, and therefore the interest rate on Spanish government debt rose.