This publication also highlights the efforts of the Bank, and other domestic and international regulatory authorities, to mitigate those risks. The pattern of risks I am going to discuss was examined in our December 2010 issue. We are continuing to track them and will provide an updated assessment in June. Sovereign risks have become increasingly prominent in a number of advanced economies.
Many countries entered the crisis with weak fiscal positions and then were further weakened by the effect of low growth on tax revenues and the costs of economic stimulus and the bailouts of financial institutions. These problems are most acute in the peripheral countries of Europe – notably Greece, Ireland and Portugal.