Moreover, the process of deepening international financial markets – despite all benefits – entails its own risks: Inconsistent medium-term macroeconomic policy configurations might lead to marked shifts in investor sentiment and more volatile capital flows. In sum: Globalisation of financial markets has certainly helped to finance larger current account deficits than could have been imagined some decades ago.
Moreover, the value of immediate action, without relying too much on automatic stabilizers, has proven to be essential. Besides, it was necessary to be forceful (and even overact) in order to overcome economic agents’ negative expectations. For an appropriate international policy coordination, to avoid the temptation to act selfishly was key.