The BIS warned heavily indebted nations of a sudden loss of market confidence due to weak economic momentum and an urgent need for public spending, impacting government bond markets and potentially spreading strains broadly.
The BIS cautioned against advanced economies running fiscal deficits larger than 1% of GDP to prevent public finance stress, particularly timely amid upcoming elections when governments typically increase spending for voter support.
Bitcoin and gold have surged this year, with some attributing it to pricing in a potential fiscal crisis in the U.S. and other advanced nations, despite the perception of BTC as an anti-fiat asset that tends to drop along with other risky assets.
Global public debt as a ratio to GDP has risen since 2020 due to increased spending amid dwindling revenues from the pandemic, exacerbated by rapid central bank rate hikes, with the U.S. reaching a debt-to-GDP ratio of 123% by the end of 2023.
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