LONDON: Billionaire investor George Soros says "we have just entered Act II" of the crisis as Europe's fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession.

"The collapse of the financial system as we know it is real, and the crisis is far from over," Soros said at a conference in Vienna.

Soros, 79, said the situation in the world economy was "eerily" reminiscent of the 1930s, with governments under pressure to narrow their budget deficits at a time when the economic recovery was weak.

Concern that Europe's sovereign-debt crisis may spread sent the euro to a four-year low against the dollar on June 7 and has wiped more than US$4 trillion ($5.8 trillion) from global stock markets this year.

Europe's debt-ridden nations have to raise almost €2 trillion ($3.5 trillion) within the next three years to refinance, says Bank of America.

"When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken centre stage, but the effects are liable to be felt worldwide," Soros said.

Soros gained fame in the 1990s when he reportedly made US$1 billion correctly betting against the British pound.

He also wagered that Germany's mark would appreciate after the collapse of the Berlin Wall in 1989 and that Japanese stocks would start to fall in the same year.

His firm, Soros Fund Management, manages about US$25 billion.

Credit Default Swaps, which aim to protect bondholders against the risk of a default, were dangerous and a "licence to kill", Soros said yesterday.

They should only be allowed if there was an insurable interest.