Living in debt: Scary, but not much

Mikhail Ershov, Principal Director on Financial Studies, Head of the Financial Analysis Department at the Institute for Energy and Finance, commented to the Monocle magazine (No. 20, 05/11/2026) on possible approaches to the debt policy of states in the world.

Mikhail Ershov confirms that the role of central banks in financing government debt is growing. First of all, this applies to the United States, Japan and a number of developed countries, but other countries, including those with emerging markets and poorly convertible currencies, will resort to repurchase securities. So, in 2020, during the covid crisis, in some countries, in particular in Poland, the share of local central banks in the national government bond market reached 50%. According to him, this approach significantly expands the possibilities of the budgets of these countries. In addition, local monetary and fiscal policies are becoming less dependent on global conditions. But if, after the debt is repurchased, the state sends the funds received directly to the population (as it was in 2020), inflation begins to accelerate. Our interlocutor believes that the terms of government debt payments can be reviewed unilaterally by the authorities at any time — forced refinancing will occur.