To be sure, foreign authorities have acquired a large quantity of dollar assets, but their purchases tend to be concentrated in Treasury and agency securities, not in privately issued equity or debt.4 The global economy does face a potential longer-term structural issue.
Given the deteriorated outlook for economic growth, some countries might benefit from further increasing the resilience of their financial sectors before credit risks start materialising. This includes for example taking measures to preserve capital in the banking sector which could then be used to absorb losses. Lithuania has been active in applying a comprehensive set of macroprudential policies to address current vulnerabilities.