MNI BRIEF: High Debt, Rates, Pose Stability Risk- Klaas Knot

Persistent inflation, strong interest rate rises, tightening financial conditions and slowing growth rates may make it harder for borrowers to service a historically high stock of global debt, Financial Stability Board chair Klaas Knot has warned in a letter to G20 leaders ahead of this week’s New Delhi Summit.

The letter also highlights ongoing concerns over the build-up of leverage in the non-bank financial sector, as well as work to understand the policy implications of March’s banking-sector turmoil.

“Further strains in financial markets cannot be ruled out in the months ahead as higher debt servicing costs continue to permeate the economy,” Knot writes. “At the same time, the financial system is in the midst of deep structural change, including the need to respond to accelerating digitalisation and to climate change risks.”