Against this background, overseas investors adopted a cautious investment stance, giving immediate rise to concerns over peripheral countries’ ability to raise funds. Although the second bailout package for Greece has recently been approved, it is unclear whether the country can succeed in implementing the fiscal austerity measures it promised the international community, given the domestic situation.
At the same time, there has been some progress in the moves to strengthen fiscal discipline within the euro area, as evidenced by the fact that most of the EU member states have signed the new “fiscal compact.” Yet, it is still uncertain whether individual countries will be able to steadily correct the imbalances through fiscal reforms and increases in their competitiveness.