The global economy is currently grappling with unprecedented levels of sovereign debt and heightened currency volatility. Sovereign debt, the money borrowed by a country's government, has surged to record highs, driven by factors such as the COVID-19 pandemic, increased public spending, and the need for economic stimulus. Meanwhile, currency volatility has become more pronounced due to geopolitical tensions, differing economic recovery rates, and changing monetary policies among major economies. The interaction between sovereign debt and currency volatility is complex and mutually reinforcing. High levels of sovereign debt can undermine investor confidence, leading to capital outflows and depreciation of the country's currency. As the currency weakens, the cost of servicing foreign-denominated debt increases, further exacerbating the debt burden. Conversely, currency volatility can complicate debt management, particularly for countries with significant foreign-denominated debt. Exchange rate fluctuations can lead to unexpected increases in debt servicing costs, potentially leading to default or the need for debt restructuring. Additionally, the anticipation of currency depreciation may prompt governments to adopt policies that prioritize short-term stability over long-term economic health, potentially leading to a vicious cycle of rising debt and ongoing currency instability. This session will provide fresh perspectives on these complex dynamics.
Find out more about the Festival of Ideas by clicking
here and for enquiries, please contact LKYSPP Events Team via email:
decb64_bGt5c3BwLWZvaUBudXMuZWR1LnNn_decb64