Summary of research seminar titled ‘Navigating high public debt: fiscal strategies and financial market risks in advanced economies’
On 18 June 2026, the UKNF hosted a meeting with Zsolt Darvas of Bruegel think thank, who gave a speech titled ‘Navigating high public debt: fiscal strategies and financial market risks in advanced economies’.
During the meeting, a discussion was held on the potential impact of the public-sector debt ratio, which is increasing in a number of countries, on financial markets. The role of fiscal rules in reducing public debt was also explored.
According to the speaker, European banks are currently well prepared for a potential decline in the market value of the government debt securities held in their portfolios.
Participants in the seminar emphasised that, even though the growing share of government bonds in banks’ assets, observable in many countries, does not pose a risk to their stability, it may negatively affect the sector’s ability to finance the economy, including extending loans to businesses.
Other issues raised during the seminar included, among other things, the impact of political polarisation on the possibility of fiscal consolidation, the importance of numerical fiscal rules for the level of public debt, and the role of central banks in the stabilisation of government debt.
