High public debt, NBFIs and the risk of market dysfunction

Mathias Drehmann and Sonya Zhu

No 136, BIS Bulletins from Bank for International Settlements

Abstract: Near record-high government debt levels and the growing role of non-banks have reshaped government debt markets in recent years.High levels of government sector debt are expected to worsen future government debt market liquidity conditions in general, including by increasing the risk of market dysfunction. A large non-bank financial institution footprint heightens the risk of market dysfunction while also making very favourable liquidity conditions more likely.

Pages: 8 pages
Date: 2026-09-29
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