Read Valentina Milano and Pietro Reichlin’s new column Risk sharing across the US and Eurozone: The role of public institutions (VoxEU, 23 January 2017).

Abstract
Risk sharing across the Eurozone is well below the levels observed in other federations, including the US. This column argues that the US achieves more intensive risk sharing largely because of a more integrated financial market, and also that the contribution of public institutions to risk sharing is much higher in the Eurozone than in the US. The reason why the Eurozone needs more fiscal transfers to withstand idiosyncratic shocks is not because these institutions should do more to improve risk sharing, but because delegation of risk sharing to national governments threatens the stability of the currency union.