The strong alignment of long-term bond yields of euro countries, which actually have different degrees of credit-worthiness, is evidence for the fact that meanwhile investors assume at least a partial factual debt union. Against this background, this project wants to point out ways in which national fiscal responsibility can be strengthened within the Eurozone. After having developed a full-fletched insolvency procedure in the previous project, this project takes into account an innovative debt instrument, i.e. so-called “Accountability Bonds”. The basic idea of accountability bonds is to design at least part of public debt of highly indebted euro countries to exhibit more features of equity-like capital, which would imply losses on the part of the investor in case of outright insolvency of the debtor country. The design of accountability bonds provides for a complete exclusion of any bail-out measures. Instead, an automatic default on these debt instruments would be triggered by certain events (e.g. if some debt threshold were to be surpassed). This project wants to specify these triggering events. Additionally, the project will focus on how to deal with already overindebted countries at the time of the implementation of the accountability bonds since the default scenario might be triggered right away.