The Bundesbank has made what might best be described as an interesting contribution to the debate about how to handle further sovereign insolvencies in Europe. In its monthly report it has suggested that countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.

“[A capital levy] corresponds to the principle of national responsibility, according to which taxpayers are responsible for their government’s obligations before solidarity of other states is required,” the Bundesbank said in its monthly report.

The bank is not blind to the difficulties of such a levy and acknowledges that it carries significant risks and its implementation would not be easy. It is not a completely new idea and was mooted by the International Monetary Fund last October. It reckoned that for a sample of 15 euro area countries, a tax rate of about 10 per cent on households with positive net wealth would be required to reduce debt ratios to end-2007 levels.

Bailout countries were not included, but it’s safe to assume that a 10 per cent levy on Irish households would not put a tooth in the problem here. Your first problem would be finding households with a positive net worth in a country that has seen property prices slump by 50 per cent.

Your next problem would be catching the really big fish, given their fondness for living abroad. A back of the envelope calculation by the Forum on Philanthropy reckons about 200 of our really wealthy citizens are tax exiles of some form or another.

The Bundesbank’s idea is unlikely to gain traction, but should engender plenty of debate.

If it does, it will have served one purpose at least – as a reminder of the danger that lurks beneath the surface of Europe: high levels of sovereign debt built up by member states as they grappled with the problems of the last five years.