Entering a monetary union can lead to fiscal risks for countries. This study looks at the possibility of financial crises in a monetary union when governments can't borrow enough to maintain their desired fiscal policies. The researchers considered different ways governments might respond to a crisis, like defaulting on debt or changing their policies. They applied their model to the European Monetary Union and found that countries with lower debt levels are safer, while countries like Italy and Greece, with high debt levels, may be at risk of financial crises.