These savings were mostly held in official reserves, which increased six fold to around five trillion dollars in only a decade. Because financial markets within Asia are underdeveloped, the reserves were invested in advanced economies, for instance in US treasuries. This may have reduced long-term interest rates and fuelled the credit boom.
Structural reforms can unlock the potential to increase productivity and thus improve competitiveness without inducing deflation. There is no way around the fact that Europe is part of a globalised world. And, at the global level, we are competing with economies such as the United States or China. To succeed, Europe as a whole has to become more dynamic, more inventive and more productive.