According to BlockBeats, the Bank for International Settlements (BIS) expressed concerns in its annual report released on July 1st. The report suggests that despite current financial market pricing showing only a small possibility of public fiscal pressure, confidence could rapidly collapse if economic momentum weakens and there is an urgent need for public expenditure in structural and cyclical aspects. The government bond market would be the first to be impacted, but the pressure could spread more widely, as has happened in the past.
The BIS did not specifically point out any country in its warning. However, it cautioned that this year's fiscal deficit in developed economies should not exceed 1% of the Gross Domestic Product (GDP), which is lower than the 1.6% in 2023. The BIS's warning comes amidst a global economic climate that continues to grapple with the aftermath of the pandemic and other financial challenges. The report serves as a reminder to governments and financial institutions to maintain fiscal discipline and prepare for potential economic downturns.