Europe has to face the triple challenge of sovereign solvency, liquidity problems and the repercussions of the banking crisis. The Euro zone is pressurised into taking more decisive action on the institutional deficiencies of the European Monetary Union. This paper reviews the European trajectory from makeshift to more comprehensive strategies with resecue mechanisms for countries in distress, including an assessment of the role of the European Central Bank and the conflicting interests of the Member States. A section on the Spanish Recapitalisation Schemes of 2012 and the EU’s policies on recapitalising banks demonstrates the interface between the sovereign debt and banking crises.