America’s soaring national debt is a ticking “time bomb” that threatens global financial stability, a Swiss official warned in an interview published Saturday.
Swiss Finance Minister Karin Keller-Sutter contrasted her country’s “disciplined” finances with those of other countries, including France, that she said were “so indebted they’re hardly able to act any more,” Reuters reported.
“Or take a look at America. That’s a time bomb. The mini-crash on the stock markets at the start of August was a warning shot,” she told the Swiss newspaper Blick. “It was an expression of investors’ fear of a recession.
“Debt levels in the U.S. and Europe are a risk to international financial stability and a risk for Switzerland,” she said.
The U.S. national debt is more than $35.2 trillion, with recent large spikes triggered by the Afghanistan and Iraq wars, the 2008 Great Recession and the COVID-19 pandemic, according to the Treasury Department.
Earlier this month, the nonpartisan Committee for a Responsible Federal Budget said the U.S government had borrowed $1.6 trillion over the past 12 months.
The nonprofit’s president, Maya MacGuineas, said that America was “sleep-borrowing $5 billion a day” and noted that the “interest on our debt alone is more than we spend on national defense.”
During Keller-Sutter’s interview, she defended a government proposal to make the Swiss bank UBS hold more capital following its acquisition of failed former rival Credit Suisse last year.
Keller-Sutter said the change in capital requirements was needed to protect Switzerland from another banking meltdown, Reuters reported.
When asked about speculation that UBS — whose CEO has criticized the plan — might relocate out of Switzerland as a result, Keller-Sutter said the Swiss government “believes it’s good for the economy to have a large Swiss bank.”
“But the bank must decide for itself how it wants to position itself,” she said.
UBS has repeatedly said it’s committed to staying in Switzerland, according to Reuters.
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