One of the unintended consequences of the creation of a common currency, such as the euro, and of an European Central Bank (ECB) replacing national central banks, is the way authorities must deal with a commercial bank that is facing insolvency.
Under the old system, the national central bank would print enough money and lend it to the commercial bank in trouble. (This was the solution recently adopted by the Bank of England with regard to the Northern Rock Bank).
Under the new system of a common currency (euro) and a common central bank (ECB) that solution is not feasible. The only solution is now for the government to stand behind, ultimately nationalize, the troubled commercial bank and be ready to inject as much taxpayers money as needed for the bank to meet its deposit obligations. And then, I must add, to get rid of the bank as fast as possible, dismantling it or selling it in parts to other banks in the system.
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