The thesis analyses the sovereign default problem in the Eurozone in two parts. Part I explains why limited liability may have resulted in excessive debt accumulation: A commitment problem of the European Monetary Union to no bailouts may have banished interest rate risk premiums inducing its member states to ignore a part of their original repayment obligation in their debt decision. Part II shows how insurance can restore optimal incentives of debt accumulation by replacing the interest rate risk premiums with insurance premiums.