Thank you, Chairman Himes and Ranking Member Hill, for the opportunity to testify today. It is a privilege to be before this committee and to be on this distinguished panel.
The COVID-19 shock to the international financial system is a preview, a warning, and an opportunity. The pandemic has defied public health and economic predictions at every turn. Infections and deaths are still surging in parts of the world, including countries with high vaccination rates and those with domestic vaccine manufacturing capacity. Debt distress indicators were already flashing red in 2019, and debt stocks shot up faster and more broadly in 2020 than in any other year in modern history—but so far, we have not seen a 1980s-style sovereign debt crisis almost everyone expected a year ago.
Even without a wave of defaults, the pandemic has revealed a patchwork of 20th century institutions ill-prepared to handle 21st century global public health, climate, and financial shocks. On the bright side, enough people seem to have gotten the message. There is an opening for meaningful institutional reform, a shift in international debt architecture—not just sprucing up the upholstery. I hope we can take advantage of it.