The recession has been followed by sluggish recovery in many advanced market economies. The current situation is placing a very large role for monetary policy. This is straining the usual boundaries between monetary and fiscal policy. 3. The fiscal deficits led to rapidly rising levels of public debt, which are now a huge concern.
Though the levels of public debt were rising in many advanced market economies before the crisis, the Great Recession accelerated the public debt problems. The high public debts are a concern more generally and not just in the euro area. These debt problems are likely to pose a challenge for defining the proper domains of fiscal and monetary policies in the coming years. II.