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Private savings are largely funding mounting public debt

To fight the COVID-19 economic crisis, developed and developing countries have implemented the most extensive economic stimulus packages in history. Public debt soared to record levels in many countries. In parallel, central banks shifted to highly accommodative policy stances with historically low interest rates and accelerated asset purchases.

While there are compelling arguments for rolling out further fiscal stimulus to minimize the economic impact of the pandemic and accelerate recovery, soaring public debt levels present serious concerns.