The average sovereign debt in the euro area increased from 79.7 per cent of GDP in 2009 to 85.8 per cent in 2010, and is expected to increase to 88.6 per cent in 2011. Table 1 Budget deficit and sovereign debt in the euro area (Percentage of GDP)  Budget deficit  Sovereign debt  2009  6.4  79.7  2010  6  85.8  2011  4.4  88.6  Source: IMF Fiscal Monitor  The budget deficit in the United States is expected to reach 10.8 per cent of GDP this year, while the United States’ gross debt currently exceeds 100 per cent of GDP. In the summer, this situation, in combination with what appeared to be a political inability to deal with the problem of public finances, led the credit rating agency Standard & Poor’s to reduce the credit rating of the United States for the first time in 70 years. The main reason for the increase in the level of debt is that GDP growth decreased and unemployment increased in connection with the crisis in 2008–2009. Public finances are automatically weakened when GDP growth is low in developed countries as tax revenues then decrease and expenditure for transfers increases. Some countries, such as the United States and Ireland, also implemented extensive and costly government measures to support the financial sector.
In my view, the task could be easier achieved if the focus of EWE is narrowed down to the really important systemic issues i.e, the issues that have high-global impact but are beyond the capabilities of market and individual economies to monitor and make assessment. For example, instead of trying to spot vulnerabilities in all the possible key risk, in all markets, and in all economies, EWE should narrow its focus instead on the systemically-important issues, especially the known-unknowns. This include the robustness of the key global financial markets and infrastructure, risk relating to the systemically-important large economies and the operations of the internationally-important financial institutions. Such focus will make the whole EWE process more valuable and complements well with the surveillance that are done elsewhere at the country or regional level. With regards to the nature of future crises, a few realities have emerged from the current global financial turmoil. First, it is clear from recent experience that nobody is above crisis. Crisis can happen in any economy regardless of whether it is large or small, developed or emerging, with or without a sophisticated financial system, and regardless of whether the country adopts a fixed or flexible exchange rate system. And once happens, the impact is large because of the  BIS Review 19/2010  1  globalized nature of markets that drives the spillover or contagion. For emerging markets, this means the risk of future crises are wide-ranging and can be both externally and internally induced.