IslamicFinance.de

Until now a full picture of global debt was missing. However, the October 2016 Fiscal Monitor has put a number on the size of debt covering virtually the whole world. Global debt is at record highs, amounting to $152 trillion or 225% of global GDP. Close to $100 trillion or about two thirds are liabilities of nonfinancial firms and households, private debt. The remainder is public debt. The concern with excessive private debt goes beyond the risk that it may mutate into public debt. Excessive private debt is associated with financial crises. Moreover, financial recessions are longer and deeper than normal recessions. It is excessive private debt that countries should avoid. Therefore, regulatory and supervisory policies should ensure the monitoring and sustainability of private debt.