- Global debt bubble may be understated by $13 trillion: BIS
- “Central banks’ central bank” warns enormous liabilities have accrued in FX swaps, currency swaps & “forwards”
- Risk of new liquidity crunch and global debt crisis
- “The debt remains obscured from view …” warn BIS
By Mark O’Byrne | 19 September 2017
GOLD CORE — Global debt may be under-reported by around $13 trillion because traditional accounting practices exclude foreign exchange derivatives used to hedge international trade and foreign currency bonds, the BIS said on Sunday.
Bank for International Settlements researchers said it was hard to assess the risk this “missing” debt poses, but that the main worry was a liquidity crunch like the one that seized FX swap and forwards markets during the financial crisis.
The $13 trillion unaccounted-for exposure exceeds the on-balance-sheet debt of $10.7 trillion that data shows was owed by firms and governments outside the United States at end-March.
The fact these FX derivatives do not appear on financial and non-financial institutions’ balance sheets under current accounting rules means little is known about where the debt lies. […]