The Economist Intelligence Unit's Eurogeddon Report puts the risk that several countries re-introduce their own currencies at a high 35%. Along with the volatility of the situation in the financial markets, and the intrinsic difficulties of finding any kind of solution, a key reason for the high risk is the fact that the euro zone is composed of 17 democratic countries and any measures to deal with the crisis need to have democratic legitimacy and accountability.

Although democracy may be the least bad system of government, it does not have all the answers, particularly if the democratic desires of two or more countries are in conflict with each other. Democracies are understood to be the kind of institutions that exist in Western Europe or North America, that is to say, countries which elect representatives who then vote in parliament on policy and legislation.

Parliamentary votes reflect the wishes of the members of parliament (MPs) and their leaders, which may be at variance with popular opinion. This has been the case in Germany with regard to joining the euro in the first place and recently with regard to voting for rescue measures for Greece, Ireland and Portugal and expanding the use of the European Financial Stability Facility (EFSF) to include buying bonds of countries like Italy and Spain. German politicians have a duty to explain to the public the reasons for their actions, which they have not always been good at.

The euro has, in fact, been in Germany's interests by allowing exporters to plan expected revenue within the euro area and to compete better than would be possible outside the euro zone. Although the economy is likely to slow in the next six months, possibly even experiencing a recession, the strength of Germany's recovery from recession and particularly employment growth are impressive and its economy is now a resilient one.

It is right that any increase in commitment by the German (or Finnish, Dutch, Austrian, Slovakian) taxpayer should be debated openly in the national parliament and subject to ratification. It has to be said that an increase in the amount that can be provided by the EFSF from €440bn or the subsequently planned (but not yet ratified) European Stability Mechanism (ESM) would not win parliamentary approval easily in Germany and other creditor countries.

Angela Merkel needs to make it clear why they view Germany's interests as being both to remain in the euro zone and to put up the finance necessary to prevent a banking collapse that could spread across the euro zone (and possibly beyond) and carry German banks with it. She and her government should explain that as long as a new banking crisis does not occur, by far the worst of the sovereign debt crisis is in the vulnerable countries, whose governments may in varying degrees have made economic policy mistakes but whose populations are now paying heavily for those mistakes. They should also point out that it takes two parties for a country or any other organisation or person to borrow beyond its means: the borrower and the lender. The German banks that have made risky loans to weaker economies are themselves as responsible as the countries that borrowed excessively.

Winning popular consent for the harsh choices that have to be made by the vulnerable countries is if anything even more important. The consequences for any country leaving the euro zone, whether by choice or otherwise, are unpredictable. Economists disagree as to whether in the longer term they would be on balance beneficial or harmful. What can be said is that they would be traumatic in the short term. Depositors would suddenly experience a large de facto reduction in the value of their deposits, which would now be in a currency that almost certainly would depreciate sharply. Many companies with external debt in euros and income streams now in a less valuable currency would face bankruptcy.

In the last resort, if popular opinion turned against euro membership and a government was elected on a platform to leave the euro, it would be right to let the country do so, but this is not the case at the moment. The need is rather to bring about democratic acceptance of the fact that in the long term a country cannot spend beyond its means, so sacrifices have to be made.

In the case of Greece, where GDP and consequently living standards are plunging (2011 is the third year of steep decline, with 2012 certain to be a fourth), an acceptance of losses of about 50% on Greek debt by official and private foreign creditors, who are mainly in the euro zone, would show a willingness to share the pain. But further austerity measures will still be needed, on top of the second round of draconian measures that is being pushed through parliament in October. It remains to be seen what will happen to public opinion as the pain inflicted goes ever deeper.

Apart from Greece, concerns over the impact of the crisis on political stability are greatest in Italy. There seems no prospect of a stable, effective and democratically legitimate government. The incumbent prime minister, Silvio Berlusconi, spends much of his time trying to fight off prosecutions. He has finally lost the popular hold on the Italian public and must eventually be on his way out, but his departure could be a long one, during which the confidence of the markets in the country's ability to manage its debt may continue to fall.

The best answer for Italy may be a technocratic government to tackle the public finances as similar technocratic governments did in the early 1990s and also to attempt to put through parliament much-needed structural reforms. However, such an outcome does not yet have the support of a parliamentary majority. As in the case of Greece, whether the Italian public is willing to back leaders committed to doing what is needed to keep Italy in the euro area and to prevent it from destabilising the rest of the euro area remains an open question.