As we have seen in some of the crises that have hit in global financial markets, particularly those that have a public sector origin, heavy short-term borrowing by governments, when coupled with fiscal imbalances, can be a recipe for financial market crisis.
Credibility comes from monetary policies aimed at achieving price stability, avoiding either general increases or decreases in price levels, and fiscal policies that avoid imbalances and unsustainable public sector debts or deficits. In short, in the absence of an external control on fiscal and monetary policy, policymakers and politicians must act with a great deal of discipline.