Global debt reached an all-time high of $337.7 trillion in the second quarter, driven by favorable global financial conditions, a weakened U.S. dollar, and more accommodating policies from major central banks. The Institute of International Finance reported a staggering $21 trillion increase in global debt during the first half of the year, with countries like China, France, the U.S., Germany, the UK, and Japan leading the surge in debt levels when measured in U.S. dollar terms.

The rise in global debt mirrors the unprecedented buildup seen in the second half of 2020 during the pandemic. While debt-to-GDP ratios decreased in countries like Ireland, Japan, and Norway, they surged in others like Canada, China, Saudi Arabia, and Poland. The report also highlighted growing concerns over government debt, particularly in G7 countries and China. With the bond market pressures intensifying in advanced economies, caution is urged in the face of potential fiscal strains and the risk of compromising monetary policy independence, especially as emerging markets face record high levels of bond and loan redemptions.