Global Market | Central Banks Face Tougher Crisis-Management Role as Public Debt Rises: BIS Chief
He said leveraged non-bank investors and faster digital channels could intensify future market stress and make intervention decisions more controversial.
- On Monday, Bank for International Settlements head Central Bank Governor Pablo Hernandez de Cos warned that rising public debt and evolving market dynamics could make managing future financial crises more difficult and controversial.
- Public debt levels near post-World War Two highs, while the growing influence of non-bank financial institutions can amplify market stress during turmoil, as demonstrated by the 2020 Treasury "dash for cash" and Britain's 2022 gilt crisis.
- Hernandez said online banking, social media, stablecoins, and AI could increase the speed of future crises, forcing policymakers to react faster as rapid information spread and online withdrawals pose significant new challenges.
- "If market dysfunction threatens financial stability or monetary transmission, central banks need to intervene," Hernandez said. However, high debt levels mean even well-designed operations risk being misinterpreted as fiscal policy.
- "Central banks have a key role to play, but so do regulators and governments," Hernandez said, adding that the Bank of England's response "offers a blueprint," though such commitment might not survive larger crises.
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17 Articles
The Economic Times
Times of IndiaGlobal Market | Central banks face tougher crisis-management role as public debt rises: BIS chief
BIS chief Pablo Hernández de Cos warned that future financial crises could be harder to manage amid soaring public debt, fiscal deficits and volatile bond markets. Growing non-bank financial risks and rapid technologies could accelerate turmoil. He urged stronger regulation, coordinated government action and international cooperation to preserve central banks crisis-management capabilities.
The central banks will continue to be fundamental in managing future financial crises, but the increase in public debt and other important changes in the markets can make their task more difficult and controversial, said on Monday (5) the President of the Bank of International Compensation (BIS), Pablo Hernández de Cos. Speaking in Vienna, Hernández de Cos, one of the main candidates to succeed Christine Lagarde as President of the European Cent…
Rising Debt Could Make Central Banks’ Next Crisis Response More Difficult, BIS Chief Warns
Central banks will remain the first line of defense when the next financial crisis hits, but soaring public debt, large fiscal deficits and the growing influence of non-bank financial institutions could make their interventions more difficult and politically contentious, the head of the Bank for International Settlements said Monday. Pablo Hernández de Cos, speaking in […]
BIS Managing Director Pablo Hernández de Cos said that high government debt, the growing weight of hedge funds in the bond market, and new risks like artificial intelligence could make it more difficult for central banks to intervene in the next financial crisis.
The next financial crisis may not look like the previous one. It will not necessarily be more serious, but it could spread more quickly, passing in a few hours from government bonds to investment funds and social networks to bank accounts. To launch the warning is the Bank of International Settlements (BIS), the institution that promotes cooperation between banks
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