This statement by former BIS chief economist Stephen Cecchetti and his colleagues Madhusudan Mohanty and Fabrizio Zampolli is directed not only at private debt but also at public debt.4 They show that excessively high private and public debt is not only a risk to financial stability but also to economic growth.
According to their estimations, in the euro area we are already in the danger zone – at least with regard to corporate debt, at 105% of GDP, but also in terms of public debt, at 91%. And so this is one more reason why effective limits for government debt are urgently needed.