Fiscal threats in a changing global financial system

Contributor(s): Pablo Hernández de Cos | Sovereign debt levels have increased considerably since the Great Financial Crisis, reaching historical post-World War II highs in many advanced economies. This has been accompanied by a growing presence of non-bank financial institutions in sovereign bond markets. This combination generates new financial stability challenges, which have both domestic and international aspects. This lecture will discuss how policymakers should address these challenges by employing a carefully selected mix of tools that spans fiscal, monetary and prudential policy.