When looking at the Greek and Irish Tragedies over the last couple of weeks and months, one thing that got me thinking is, could this have been prevented? Of course, the thought itself is brimmed with preposterousness. Dodgy accounts in Greece’s case and a banking system that crippled Ireland’s finances are formidable issues, make no mistake. Those in charge of running the treasuries and debt financing agencies deserve our utmost respect for theirs is truly a herculean task.

But still, what got me thinking was a comment I made when speaking earlier this month about Credit Risk in a Basel III world. There I made the bold (and so far uncontested) claim that many a sovereign will use its banks as ATMs through the upcoming introduction of the Liquidity Coverage Ratio, which demands that banks hold sufficient liquidity buffers to withstand a 30-day stress.

Of course, a sovereign might do the same by having its banks “syndicate” bond issues it could not otherwise place on the open market, but this is usually an emergency measure which does not exactly foster confidence. Using Liquidity Regulation is indeed a lot less desperate and clearly bears an economic motive –avoiding future situations akin to 2008. This in turn creates new buyers on the sovereign market in much the same fashion as Quantitative Easing did. In fact after the QE-programmes are over, some central banks might choose to quietly funnel their purchases into the investment books of banks, thus making their effects permanent while shrinking the central bank balance sheets.

Perhaps, then, an earlier introduction (or even its announcement, for their effects on market participants might have the same effect, as keen students of economic history certainly know) of the Liquidity Coverage Ratio could have taken some strain from the Sovereign debt markets. Would it have saved Greece and Ireland? Probably not. But it might just have absorbed that extra bit of stress which in turn could have helped to contain the ugly spectre of contagion, which has become all too familiar over the last year-or-so.