Bank for International Settlements general manager Pablo Hernández de Cos warned that high government debt could make future central-bank crisis intervention harder to distinguish from fiscal support. He said non-bank finance, digital withdrawals, social media, stablecoins and artificial intelligence could also accelerate or amplify market stress. The remarks were delivered in Vienna on 5 October at the SUERF Annual Lecture.
Central-bank action helped stabilise markets during the March 2020 dash for cash and Britain's 2022 gilt crisis. Those episodes showed how market dysfunction can threaten financial stability and monetary-policy transmission. Hernández de Cos argued that the setting for the next intervention would be more difficult because debt is high, non-banks hold a larger share of government bonds and information moves faster.
DEBT BLURS THE INTERVENTION LINE
Public debt in many economies is near post-war highs, while large deficits and longer-term fiscal pressures persist. That can make an asset-purchase operation appear to support government financing even when its stated purpose is to restore market functioning. The BIS chief said authorities therefore need to distinguish genuine dysfunction from justified investor concern about public finances.
Non-bank financial institutions add another layer of risk. Hedge funds, pension funds and asset managers support liquidity in normal markets, but leverage and market-based funding can amplify forced selling under stress. Hernández de Cos said stronger oversight of non-banks would help preserve the effectiveness of central-bank crisis tools and limit moral hazard.
TECHNOLOGY SHORTENS THE RESPONSE WINDOW
Online banking can accelerate withdrawals, while social media can spread accurate information and misinformation at speed. Stablecoins and artificial intelligence may introduce further channels through which pressure moves across institutions and markets. The speech said crisis frameworks must therefore be prepared for events that develop faster than earlier episodes.
Hernández de Cos also called for cooperation among central banks, regulators and governments, and said central-bank swap lines remain important during acute global stress. The practical next milestone will be whether authorities translate those warnings into clearer intervention conditions and stronger non-bank safeguards before another market shock. That work will determine how quickly support can be delivered without weakening fiscal or monetary credibility.