Sovereign debt problems and state and local finances should be viewed for the possible disruptions they can cause to the national and world economy, rather than being dismissed as inconsequential, Federal Reserve Bank of Boston president Eric Rosengren said Monday.
While he said he believes these will not cause “serious disruptions” or “widespread or cascading problems,” they should not be automatically dismissed.
“While I believe the most likely outcome [of the sovereign debt situation] is that there are no serious disruptions, interested parties should diligently consider scenarios that could be disruptive, involving various countries,” Rosengren told a Boston University conference.
Addressing state and local debt, he added: “We should consider what scenarios could emerge if political impasses result in more disruptive outcomes.”
