Stuart Oakley, the emerging-markets foreign-exchange Asia head at the Royal Bank of Scotland, told CNBC’s “Worldwide Exchange” that Europe will have a "near-death" experience before acting on the continuing euro debt crisis.

Markets will face more difficulty before things begin to get better.

The market expert said that European policy makers “drag their heels. They’re more reactionary, they’re less proactive than the Federal Reserve in the U.S. In Europe, you are going to need a near-death experience before you get some concerted policy action. That policy action will have to be pretty special to have the desired effect."

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

Oakley said be the first "near-death" situation could be Spain’s borrowing costs hitting 7 percent on its 10-year bond. A coordinated easing of central banks to include the European Central Bank, the Federal Reserve, the Bank of Japan and the Bank of England might be the best policy action, but “What is more likely to happen though will be that the ECB will finally cave in and will become the lender of last resort.”

Citing the Lehman brothers collapse of 2008, the dot.com-bubble burst in 2001 and Bear Sterns in 2007, Oakley said history showed how “these things can get out of hand very quickly.”

Gemma Godfrey, head of investment strategy at Brooks Macdonald Asset Management told CNBC, “The focus is on Spain at the moment and the Spanish government can’t see the wood for the trees and the lack of working capital could cause a catastrophe.”

Spain’s fourth-largest bank, Bankia, has become Europe’s latest catastrophe amid soaring government borrowing costs. Godfrey said Spain’s refusal to seek financial help will have to change as the situation eventually overpowers the government.

Bloomberg Business Week reported that the European Commission believes the continent needs a central authority that can oversee and bail out banks without having to go through national governments.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.