Such concerns may prove excessive: in contrast to 1997, Asian sovereigns are financially more solid, with stronger reserve buffers and – a point I will return to later – more flexible exchange rates, which have limited the build-up of external  1  International Monetary Fund, “Where are we headed? Perspectives on potential output”, World Economic Outlook, Washington DC: International Monetary Fund, April 2015.
The effects of this build-up of debt have been compounded by the significant fall in the value of financial assets from the peak reached in early 2000. There is uncertainty over the size of the adjustment still needed in the euro area corporate sector in order to enhance productivity and profitability.