Casper Economic and Political blog

Yes, they can. Government will never have to default on debt denominated in domestic currency (i.e. a currency that they can create more, like in Zimbabwe, except in 1999 where Russia Choose to go bust due to political infighthing) BUT now in Eurozones, only ECB is allowed to print Euros and France, Italy etc can no longer inflate their way out of their debt.

In the past 15 years, France has increased its debt as a % of GDP (then in franc) from 35% to 70% (now in Euro).

Although even if France go bust and had to exit Euro, deposits in Euros will be sort of kind of safe (although Euro will like to dive following the event, those euros denominated savings etc will remain in Euros)

http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2008/05/30/the-problem-with-the-euro.aspx

http://www.independent.co.uk/news/europe/meps-to-keep-audit-of-wage-abuse-secret-814169.html

Voting in Strasbourg yesterday, MEPs not only refused to release of the report but also rebuffed calls from the Ombudsman to publicise the names of the 407 MEPs who are enrolled in a voluntary pension fund, subsidised by the taxpayer, The Independent reports.

The European Parliament pays more than €25,000 (£20,000) a year into the pension funds of the subscribing MEPs, who are required to contribute another €13,860 (£11,100).

All funded by contribution from the members state, which derive the money from..errr.. the tax and you and I paid !