Investor enthusiasm for euro zone debt could be abruptly reversed and governments should not bank on borrowing costs remaining super-low, one of the bloc's senior economic officials warned on Thursday.
The comments from the head of the European Stability Mechanism, the euro zone's rescue fund, come weeks after the European Central Bank issued a similar warning.
"Everybody is surprised how quickly conditions have improved," Klaus Regling told journalists ahead of a meeting of ministers from the 18 countries using the euro.
"One must worry a little bit that this happens so quickly ... that we may see some overreaction in markets. This may create room for backlash eventually," he said.
Debt crisis forgotten
With the financial crisis over and fears of a break-up of the euro all but forgotten, governments in highly indebted countries from Italy to Ireland are finding it ever easier and cheaper to borrow.
European stock markets have seen stellar gains with those in Germany hitting record highs. Even Greece, which defaulted on a large swathe of its national debt just over two years ago, has started borrowing from investors again.
"All industrialised countries benefit from low interest rates," said Regling, cautioning governments against relying on the costs of borrowing staying so low.
Regling's remarks chimed with those of Germany's finance minister Wolfgang Schäuble, who said that he was more concerned about a new property price bubble than he was about the threat to the economy of falling prices or deflation.
"I'm more concerned about bubbles building, such as in the real estate sector, if we have too much liquidity," Schäuble said.