Public and private debt, which are close to their all-time highs in global terms, are one of the global financial system’s vulnerabilities. Industrial countries which bore the brunt of the crisis have seen public debt levels balloon, largely on the back of measures to shore up the financial sector. This has shifted risk from the private sector to the government sector.
In many emerging market economies, by contrast, it is above all (non-financial) private sector debt that has increased. In fact, it has more than doubled in recent years. Compounding this situation further, some of these sectors are highly exposed to currency risk. 1  Source: Bloomberg, 14 September 2018. 3  Banking sector debt has generally diminished in recent years.