In the context of the euro area this is due to the absence of a fiscal union, the different fiscal positions of the individual countries, and the different, but on the whole high, levels of their debt burden. Against this backdrop, Bulgaria's fiscal position continues to be solid, with its second lowest debt-to-GDP ratio in the EU. However, the country's fiscal position faces some serious potential risks arising from the severely disrupted budgeting process over the last two years and the trend, emerging in this period, towards continued loosening of fiscal policy. The issue is not so much the high expenditures which were needed and largely unavoidable, especially during the Covid-19 crisis, but rather their quality. The higher expenditures in that period, which led to a higher deficit, were meant to be targeted and temporary, and this was the right approach. Within the strongly fragmented budgeting process, however, these targeted and temporary expenditures mostly became allencompassing and continuous, and tended to increase further. In this case risks occur along two lines. On the one hand, the persistent and progressive loosening of fiscal policy could bring us back into the long-forgotten times of high deficits, growing debt, and liquidity difficulties of the budget. This would in turn adversely change the internal structure of budget expenditures, with increasing debt service expenditures, especially in the context of rising interest rates, at the expense of investment and social expenditures.
It is likely that a significant portion of these moneys is managed out of Hong Kong. In fact, over 40 Mainland companies providing fund management, securities and futures, insurance, and other services have already established a presence in Hong Kong to manage the funds flowing out of the Mainland and engage in fund advisory businesses. 13. So, the implications from the gradual liberalisation of Mainland China’s capital account are clear. Hong Kong is bound to be a key destination as well as the management hub for the gradual increase in the portfolio flows from Mainland China. This trend will present huge opportunities to financial institutions, private banks, fund managers, and other financial service providers looking to tap these funds. 14. Having said that, one should expect that the process of financial liberalisation in Mainland China will be a gradual and controllable one, in a manner that will fit the Chinese saying of “crossing the river by feeling the stones” so that one can adjust the speed and tactics of crossing the river without fear of falling in and getting drowned. It is, however, important to realise that this process has already begun: this is something that global financial firms, especially asset managers, should not ignore in their business planning process. The wider external use of the RMB 15. RMB. 2  Now, let me move on to the second important trend: the wider external use of the  BIS Review 153/2010  16.