If the sovereign debt problem in Europe triggers instability in global financial markets, it will exert an adverse impact on the global economy as a whole. To address the problem, further efforts in the following two areas are indispensable. One is strenuous efforts by Greece and other problem-stricken countries to reduce their fiscal deficits and to advance a structural reform to strengthen competitiveness.
The other is to “buy time.” The European Union (EU) and the International Monetary Fund (IMF) need to work together to provide financial support to the problem-stricken countries until those countries’ efforts produce noticeable outcomes. In this regard, Greece, the EU, and the IMF have been taking necessary steps. The Bank has been monitoring the situation carefully.