The latter have considerable social costs in the short run. Social discontent against them and the governments proposing them erodes the credibility of reforms and the authorities, increasing, in turn, the sovereign debt risk. Euro area, and particularly its Southern members, are facing a concern, whose solution bears consequences with economic and political implications for the future of all member states and the common currency. The reforms and policies undertaken by euro area authorities, individually or in a concerted manner, have important and direct implications for our economies. Experience to date has shown that our partners and their large banks have adopted an approach that maximizes their benefits as “owners”. Consequently, their decision-making is entirely conditioned by the fear of loss of stability and sovereignty that associates the current concerns of the economy and the parent bank. This has pushed these countries to take biased measures against our economies, risk rating investment in our countries at 100%. This decision-making, which is directly linked to the events taking place within the euro area, has practically transferred the issue of stability versus sovereignty in our economies. These policies represent a negative phenomenon, which contradicts the positive and stabilizing role that our partners have been playing so far in South East European economies and societies. The countries of our region have in the last 20 years undertaken numerous structural, political and economic reforms, in view of consolidating the democratic state, the rule of law based on principles of market economy and supported by a consolidated financial system.

But the share coming from commercial banks and direct equity investments from private creditors will decrease more than was expected, which means that capital flows will be smaller. I do not wish to review the origins of the East Asian crisis in detail, but it shows us that it is the structural weakness of domestic financial systems and the growing foreign perception of that weakness that triggers a crisis in an economy. Like the Mexican peso crisis, the East Asian crisis was a classic “self-fulfilling prophecy” panic initiated by Jeffrey Sachs. It is widely recognized that both the Mexican crisis and the crisis in the East Asian countries stemmed from incorrect macroeconomic policies and structural imbalances. Exchange rate policies in particular, combined with irresponsible fiscal policies, put enormous strain on the balance of payments. Weak domestic financial systems and rapid expansion of domestic credit, combined with pegged exchange rate regimes, deepen the economies’ dependence on short-term external borrowing. But it is a distinctive feature of the East Asian crisis that it is based more on the private sector than were the public sector crises seen during the 1970s and 1980s. The solutions found for the public-sector-based crises of those years were simpler. Programs supported by the IMF, and much less government borrowing from international institutions, were the main elements in the solution of those crises. The private-sector-based crises of today are more complicated and harder to understand.