RESERVE Bank Governor Glenn Stevens says Europe, the US and Japan face immense fiscal challenges in the wake of the global financial crisis.
Mr Stevens told a business forum in Melbourne that the challenge for those countries was to articulate a short term path that would not knock economic recovery on the head, yet would be sustainable in the long run.
"That's going to be very difficult indeed," Mr Stevens said.
"From our point of view, of course these things present as risks to the economic outlook of the nation."
However, Mr Stevens said, Australia had not had to buy its banks, government finances were in terrific shape, the country had a strong regulatory framework and it did not have to adopt very unconventional fiscal measures.
Mr Stevens said that regular measures applied liberally had worked.
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Mr Stevens said Australia remained open for business and close to the part of the world where all the growth was happening.
"So, its not Pollyanna-ish, (not) everything's rosy, but how many other countries are on that list - not many," he said.
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