Debt and deficits may cause financial crisis, RBA research boss warns. From the A fr Investors could decide government debt is no longer a safe asset, causing financial calamity, RBA research boss John Simon has warned.
" Persistent budget deficits may cause the next global financial crisis, as investors decide government debt is no longer a safe asset, badly damaging banks’ balance sheets, RBA research boss John Simon has warned in his final remarks. Dr Simon said the biggest medium-term risk to global financial stability was what he termed the “bank-sovereign nexus”, where investors abandoned the widely held assumption that government debt was safe, causing a financial market meltdown."
