World Bank Vice President and Chief Economist Carmen Reinhart said a financial disaster is on the horizon and could take the form of a sovereign default.
Speaking to Bloomberg TV on Oct. 15, Reinhart said after the coronavirus drove the biggest economic slump in nearly a century, bankruptcies have been somewhat staved off by massive government stimulus and central-bank easing. But the path of global quantitative easing “is not a sustainable one,” and many countries could face a debt crisis just as their economic recoveries materialize, Reinhart said.
“This did not start as a financial crisis, but it is morphing into a major economic crisis with very serious financial consequences,” she said.
“The need to look for new revenue sources to support social needs is going to be, I think, a very pressing one moving ahead,” she said, and stating that the risk of a debt crisis cuts “across all regions, in varying degrees, and across all income strata.”
