Growing risk of 'debt trap' if interest rates stay low, say central bankers

Near-zero rates have spurred borrowing and left consumers, businesses and governments at risk, says Basel institution

A new warning has been issued about the growing risk of a "debt trap" if interest rates around the world stay near zero, which has encouraged borrowing by households, businesses and governments.

The Bank for International Settlements - known as the central bankers' bank - highlighted the vulnerability of consumer, business and government finances to interest rate increases in its 174-page quarterly report. Claudio Borio, the head of the monetary and economic department, described this as "a defining question for the global economy".

The increase in the percentage of firms unable to cover their interest payments with their earnings does not bode well