The president of the Financial Stability Board, Dutchman Klaas Knot, wrote a letter on Wednesday to the finance ministers and the governors of the central banks of the G20 regarding the worsening prospects for financial stability.

He wrote that the combination of these factors mentioned together with tighter global financial conditions can turn into vulnerabilities that previously existed in the world system or make new appear ones.

G20 finance ministers and central bank governors will be meeting in Bali, Indonesia on July 15th and 16th.

Knot specifically warned of the high level of sovereign, corporate and household indebtedness. The FSB observes the tensions in the commodity markets and possible contagion to the global financial system.

He considered that the end of the Covid-19 pandemic is underway and it is important to rebuild a space of macroeconomic prudence where national conditions allow it.

The Financial Stability Board, headquartered in the Swiss city of Basel, was created at the G20 meeting in London in 2009 due to the economic crisis and has been ensuring stability ever since.

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