The Federal Reserve has identified the US government's $36 trillion debt as the biggest risk to financial stability, highlighting concerns about inflation and geopolitical tensions. The central bank's survey revealed that while the banking sector is described as "sound and resilient," there are concerns about record-high leverage among hedge funds, as well as delinquency rates in household credit, particularly among those with low credit scores. The US government's debt has reached unprecedented levels, with interest payments surpassing spending on defense and Medicare. The Congressional Budget Office warns that the debt-to-GDP ratio could exceed 106% by 2027 if no action is taken. Additionally, the report criticizes the lack of regulatory framework for stablecoins and highlights volatility and funding risks in bond markets.



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