Financial Stability Board Chairman Nott warns the G20 of the difficulty of debt repayment

The G20 countries should pay close attention to the problems of loan repayment due to high interest rates and weak growth in the global economy. So wrote Claes Nott, chair of the Financial Stability Board (FSB), in a letter to G20 leaders in the run-up to the Organization of Economically Important Countries summit in New Delhi, India, on September 9-10. .

Nutt, who is also the chairman of De Nederlandsche Bank (DNB), speaks of a challenging economic climate due to persistent inflation and weak growth. He warns that raising interest rates by the central bank to contain high inflation could affect the ability of borrowers to meet their obligations at “historically high” global debt levels. Nott believes that the authorities should pay close attention to asset quality in sectors most sensitive to rising interest rates, including real estate.

Nott also discusses the turmoil in the banking sector that erupted in March this year due to the collapse of regional banks in the US and the collapse of Credit Suisse. He says the turmoil was a test case for banking sector reforms introduced after the 2008 financial crisis, and that lessons can be learned. Note also touched on the risks associated with cryptocurrencies, as well as the digitization of banking.

The Financial Stability Board, based in Basel, Switzerland, is a partnership between the financial authorities of more than twenty countries, established in 2009, with the aim of coordinating the rules of the financial sector and supervising the banking sector. Nott took office as President in December 2021. Prior to that, he was Deputy Head of the Federal Security Service.

The G20 is a group of countries that collectively represent about 80% of the global economy. The European Union is also part of the G20.