Your fundamental premise is wrong (as an aside, fiat currency does pay dividend - it's called "interest"). Central Banks are meant to be independent of the gov

Your fundamental premise is wrong (as an aside, fiat currency does pay dividend - it's called "interest"). Central Banks are meant to be independent of the government. Their mandates are: (a) Acting as a lender of last resort to banks (b) Controlling inflation/deflation through monetary policy (c) (In some cases, like that of the Fed) ensure unemployment does not breach an "acceptable" level. In almost no mandate, is it mentioned that the Central Bank has to monetize sovereign debt (T-Bills, Treasuries, Greek Debt, Spanish debt etc). The ECB isn't legally allowed to do so for very good reasons. Even the Fed doesn't do that - all its Treasury and MBS purchases are from the secondary market. In fact, when the Spanish government directed $19B ECB funds to Bankia via injecting Spanish debt into the bank, it was a covert form of sovereign debt monetization - something the ECB objected to vehemently, but couldn't stop. Even Germany could not pay its debt if investors demanded redemption at maturity They always demand redemption at maturity - every single one - however, it occurs via a debt-rollover, ie issuing new debt to repay older debt. What Europe needs is that the distortions in the balance-of-payments between countries should be fixed - the liabilities of the Eurozone aren't evenly distributed amongst countries with respect to their capability to service those liabilities (and that indeed is due to irresponsible fiscal behavior). Bu this can't be controlled by monetary policy alone - it requires closer fiscal integration (and agreeing upon things like retirement ages, pensions, insurance and a whole lot of other stuff).