The E.U.’s European Council, which represents the union’s state governments, agreed at the end of June in 2012 to make the federal bailout fund directly available to banks. Spanish banks had been seeking 100 billion euros. Counting the bailout funds as debt of the state rather than as bank debt would have further increased Spain’s relatively high borrowing costs. Counting the bailout funds as bank rather than state debt can be viewed as an instance of the E.U.’s “direct effect,” wherein the federal level can directly affect E.U. citizens and their private associations. This distinguishes the E.U., by the way, as an instance of modern federalism, from the old foedus (i.e., treaty), or confederal (“alliance”) type of federalism as evinced by the American Articles of Confederation.
The full essay is at "E.U. & U.S."