Likelihood, two years: 3Possible; to end-2028
Likelihood, ten years: 4Likely; to end-2036
Systemic impact: 4Severe; global
National impact: 4Severe; typical highly exposed nation
Onset pace: Weeks
Duration (acute phase): 1 year (funding markets impaired for nine months)
Warning time: Months (valuation and leverage signals, widely discounted)
Scope: Global
Recovery horizon: Years
Capability load: Hard 0/3Soft 1/3Economic 2/3; domains loaded High
Concurrency: Standalone; triggers 4 · triggered by 9
Confidence · movement: medium; new

Rated at Standard Severe. Event reach: global event. Source of scores: model-panel-v0.5.

03Narrative

Dateline: November 2029

The repricing began in the second week of January 2029, when two of the largest listed technology companies cut their capital spending plans for data centres and a group of lenders marked down the office and data-centre loans that had been valued on the earlier plans. Within ten days three private credit funds had suspended redemptions and the banks that financed them were drawing on central bank facilities. Deposits moved faster than in any earlier episode: one mid-sized lender lost a fifth of its deposits in two working days, most of it through mobile applications outside business hours.

By the end of February global equities were 40 per cent below their peak. The major central banks reopened currency swap lines and bought government bonds to keep core markets working, and those markets held. The stress then moved to weaker borrowers. Cross-border private lending contracted by a quarter over the following two quarters as banks and funds reduced foreign exposures. Trade finance lines were cut for importers in South Asia, Africa and Latin America, and borrowing spreads for the weaker sovereigns rose by 500 basis points.

The fiscal demands then fell due together. Governments were asked to guarantee bank liabilities, pay for rising unemployment and refinance maturing debt in the same quarter, in markets that would lend only at short maturities. Eight governments lost market access between March and August. Two of them had guaranteed their banking systems in full in the first week and found that the guarantee had moved the doubt from the banks to the state. Four suspended payments on external bonds. Restructuring talks were slow because bondholders, bilateral lenders and commodity traders holding collateral had no common forum.

In the countries that lost access, the effects reached public services within weeks. Salaries for teachers and health workers were paid late or in part. Importers could not obtain foreign currency for fuel and medicines, and hospitals rationed supplies. Card and transfer systems continued to operate throughout, which limited the damage, but several governments imposed limits on withdrawals and on transfers abroad.

Funding markets remained impaired for nine months. Issuance by investment-grade borrowers resumed in October 2029. By then unemployment in the advanced economies had risen by three percentage points, technology investment had fallen by a third and several large infrastructure projects had lost their financing. Central banks that held large quantities of government debt faced public pressure to hold more.

The governments that came through with their capability intact had three things in common. They held liquid reserves and long debt maturities at the start. They had resolution regimes that imposed losses on shareholders and creditors before public money was used. They limited liquidity support by amount and by time, and said so in public, so that it was not read as an open guarantee. Those that could not do this spent the following years servicing the cost.

The dateline is illustrative, not a forecast. The narrative is hypothetical; the historical anchors below are real events.

04Summary

A sharp repricing of technology and commercial property assets triggers withdrawals from leveraged funds and from bank deposits that can move within hours. Global equities fall 40 per cent, cross-border private lending contracts by 25 per cent and borrowing spreads for vulnerable sovereigns rise by 500 basis points. Funding markets remain impaired for nine months. Several governments lose market access as bank support, unemployment spending and refinancing needs fall due together. The test for a nation is whether it can keep payments and essential services running and allocate losses without turning liquidity support into a public guarantee it cannot afford. The record continues the first-pass global financial crisis and absorbs the sovereign funding crisis as its national face.

05Historical anchors

Event	Date	What happened	Calibrates
Global financial crisis	2008–2009	Lehman Brothers failed on 15 September 2008 and interbank and cross-border lending froze. The S&P 500 fell about 57 per cent from its October 2007 peak to March 2009. World merchandise trade volume fell about 12 per cent in 2009 and world output contracted that year. US unemployment peaked at 10 per cent in October 2009.	The full path: equity fall, funding freeze, contraction of cross-border lending and a recession lasting years. Standard Severe sets a smaller equity fall than 2008 and assumes core markets are kept open.
Euro area sovereign debt crisis	2010–2012	Greece, Ireland and Portugal lost market access and entered European Union and IMF lending programmes between May 2010 and May 2011. Ireland had guaranteed most liabilities of its domestic banks in September 2008; its public debt rose from about 25 per cent of GDP in 2007 to about 120 per cent in 2012. Greek output fell by about a quarter between 2008 and 2013.	The channel this scenario tests: private bank losses assumed by the state, loss of market access and cuts to public services. A blanket guarantee can move the funding problem from the banks to the sovereign.
March 2020 dash for cash	March 2020	Investors sold government bonds to raise cash and the US Treasury market stopped functioning normally. The Federal Reserve bought more than US$1 trillion of Treasury and mortgage-backed securities within three weeks and reopened swap lines with other central banks. The IMF reported portfolio outflows from emerging markets of about US$100 billion, the largest on record.	Onset in weeks and the part played by leverage outside banks. Markets recovered quickly because central bank support was very large; the scenario assumes support that is slower and partial outside the core.
SVB and Credit Suisse	March 2023	Depositors withdrew US$42 billion from Silicon Valley Bank on 9 March 2023 and had requested a further US$100 billion for the following day, according to the Federal Reserve's review. US authorities then protected all deposits at the bank. Credit Suisse was sold to UBS on 19 March with state support and about 16 billion Swiss francs of its additional tier 1 bonds were written down.	Deposit mobility: a run completed in two days, not weeks. It also shows the pressure on authorities to extend protection beyond the insured limit.
UK gilt crisis	September–October 2022	After a fiscal statement on 23 September 2022, 30-year gilt yields rose by more than 100 basis points in four days. Leveraged liability-driven investment funds used by pension schemes faced collateral calls and sold gilts. The Bank of England announced temporary purchases of up to £65 billion on 28 September and bought about £19 billion.	An advanced-economy government bond market can be destabilised within days by leveraged holders outside the banking system. Support limited by amount and by time was sufficient.
Sri Lanka default	April 2022	The government announced a suspension of external debt payments on 12 April 2022, its first default. Foreign currency for imports ran out; fuel, cooking gas and medicines were rationed and there were long daily power cuts. Inflation approached 70 per cent in September 2022 and the president resigned in July. An IMF arrangement of about US$3 billion was approved in March 2023.	The national face of the scenario for a borrower with low reserves: loss of funding reaches essential services within weeks and restructuring takes years.

06Parameters

Shown at their preset values. Parameters are not adjustable in this release and nothing on this page is computed from them. Custom settings run (Phase B) but are labelled 'non-standard run' and excluded from comparisons.

Common variables at Standard Severe · read-only

1. Severity: major
severe (Standard Severe)
extreme
2. Duration (acute phase): 30 days
90 days
1 year (Standard Severe)
3 years
5 years
Standard Severe: 1 year (funding markets impaired for nine months)
3. Onset pace: days
weeks (Standard Severe)
months
years
4. Warning time: none
days
months (Standard Severe)
Standard Severe: months (valuation and leverage signals, widely discounted)
5. Scope: national
regional
global (Standard Severe)
6. Origin: natural
accidental (Standard Severe)
adversarial (great power / neighbour / non-state)
negotiated
Standard Severe: accidental (arising inside the financial system)
7. External support: full
partial (Standard Severe)
none
Standard Severe: partial (swap lines and multilateral lending, unevenly available)
8. Concurrency: standalone (Standard Severe)
plus one named scenario
plus two
9. Policy response assumed: none (pure exposure)
current plans executed (Standard Severe)
best practice
10. Recovery horizon: months
years (Standard Severe)
structural

Scenario-specific parameters · read-only

Parameter	Default	Range or options	Note
Global equity fall, peak to trough	40 per cent	25 to 55	Smaller than the fall of 2007 to 2009; technology shares fall further than the index.
Contraction in cross-border private lending	25 per cent	10 to 40	Bank and non-bank lending together, including trade finance.
Rise in vulnerable sovereign borrowing spreads	500 basis points	300 to 1,000	Applied to sovereigns with high refinancing needs or low reserves; core issuers see yields fall or hold.
Period of impaired funding markets	9 months	3 to 18	Measured to the resumption of normal issuance by investment-grade borrowers.
Governments losing market access	8	3 to 20	The specification says 'several'; eight is the working value for Standard Severe.
Deposit outflow at exposed banks	20 per cent in two working days	10 to 40	Concentrated in uninsured balances held by firms and funds.
Scope of public guarantee	liquidity support limited by amount and time	alternative: guarantee of all bank liabilities	The alternative moves bank losses to the sovereign and is the setting at Standard Extreme.

07Transmission channels

1
Technology and commercial property assets reprice sharply; lenders and funds mark down loans and holdings valued on earlier earnings and occupancy assumptions.
2
Leveraged funds face collateral calls and redemptions, suspend withdrawals and sell liquid assets, including government bonds.
3
Uninsured deposits leave exposed banks within days; banks draw on central bank facilities and lend to each other only against the best collateral.
4
Banks and funds reduce foreign exposures; cross-border private lending and trade finance contract and the currencies of borrowing countries depreciate.
5
Credit to firms and households contracts; investment falls, unemployment rises and tax revenue declines.
6
Governments face bank support, unemployment spending and refinancing in the same period; spreads for vulnerable sovereigns rise by 500 basis points.
7
Several governments lose market access; salaries, benefits and imports of fuel and medicines are paid late or rationed.
8
Loss allocation is contested; divided creditors slow restructuring and central banks are pressed to finance governments.

08Capability loading

High: capability band shifts expected under current plans. Medium: band shifts under 'none' policy response only. Low: strain without band shift. Loads are judgement-based until the Atlas connects. Domains link to the Atlas.

Domain	Load	Channel
Hard
Defence and security	Low	Procurement and readiness spending are deferred under fiscal consolidation; no direct security effect.
Strategic infrastructure	Medium	Project finance is withdrawn; payment, clearing and settlement systems must operate through the stress.
Critical technology	Medium	Venture, private credit and data-centre financing contract; public and corporate research budgets are cut.
Soft
Government effectiveness	High	Loss allocation, bank resolution, debt management and the payment of salaries and benefits without market access.
Human capital	Medium	Unemployment rises; health and education spending is cut or paid late where the state loses funding.
Influence and cohesion	Medium	Disputes over who bears losses reduce trust in institutions; aid and diplomatic budgets fall.
Economic
Macro-financial	High	Bank and non-bank funding, sovereign refinancing, reserves, the currency and the cost of public guarantees.
Industry, trade and supply	High	Credit to firms and trade finance contract; demand, investment and employment fall.
Energy and resources	Low	Commodity demand and prices fall; importers short of foreign currency face fuel shortages.

09Stakeholders

Government: Exposure
Refinancing needs, contingent liabilities to banks, reserve adequacy and the capacity to keep paying salaries and benefits.
Actions
Test the public balance sheet against bank support, unemployment spending and refinancing falling due together at spreads 500 basis points higher
Set limits on liquidity support by amount and duration in advance, and complete resolution plans that place losses on shareholders and creditors first
Lengthen debt maturities, hold liquid reserves and agree swap or precautionary credit lines before they are needed
Watch
Gross financing needs due within 12 months
Bank holdings of domestic government debt
Share of uninsured deposits and the speed of outflows
Technology: Exposure
Dependence on equity, venture and private credit funding for data centres and research; operation of payment and settlement systems.
Actions
Extend funding maturities and reduce reliance on a single lender or fund
Hold operating cash at more than one institution and within insured or collateralised arrangements
Test payment, clearing and settlement systems for peak volumes during a run
Watch
Redemption terms of private credit funds
Valuations of data-centre leases and loans
Capital spending guidance from the largest technology companies
Investors: Exposure
Leveraged positions; illiquid property and private credit holdings; bonds of sovereigns with large refinancing needs.
Actions
Apply the scenario path to sovereign, bank and property holdings together and not one portfolio at a time
Review liquidity terms against the speed at which collateral calls and redemptions can arrive
Assess sovereign exposures by refinancing need and creditor composition as well as by rating
Watch
High-yield and emerging-market sovereign spreads
Use of central bank liquidity facilities and swap lines
Redemption suspensions in property and credit funds
Public: Exposure
Employment, mortgages, pensions and deposits; in countries that lose market access, public salaries, fuel and medicines.
Actions
Households should know the deposit insurance limit and which accounts it covers
Local governments should hold operating cash to cover payroll through delayed transfers
Media and civil society should report who bears losses and on what terms
Watch
Unemployment claims
Mortgage rates and arrears
Late payment of public salaries and benefits

10Regional exposure

Region	Exposure	Rationale
North America	High	Origin of the technology and property repricing; the largest non-bank sector and the dollar funding markets on which others depend.
Europe	High	Banks are exposed to property and to domestic government debt; several members have high debt and limited fiscal room.
China	High	Property losses and local government debt are already large and export demand falls, although capital controls limit outflows.
Indo-Pacific	Medium	Open capital accounts and export dependence transmit the shock; reserves and current-account surpluses absorb much of it.
South Asia	High	Low reserves, large refinancing needs and dependence on imported fuel paid for in foreign currency.
Gulf and Middle East	Medium	Sovereign funds take valuation losses and oil revenue falls; reserves cover the exporters but not the importers of the region.
Africa	High	International bond market access closes, trade finance is withdrawn and creditor groups are divided.
Latin America and Caribbean	High	Currency depreciation, lower commodity prices and foreign-currency debt arrive together.
Russia and Eurasia	Medium	Commodity revenue falls; Central Asian borrowers are exposed, while Russia is already largely outside Western funding markets.

11Early-warning indicators

Indicator	Source	Threshold
Cyclically adjusted price to earnings ratio for US equities	Robert Shiller, Yale University, online data	above 35
US high-yield corporate bond spread	ICE BofA US High Yield Index option-adjusted spread, published by the Federal Reserve Bank of St. Louis (FRED)	above 800 basis points
Emerging-market sovereign bond spreads	J.P. Morgan EMBI Global Diversified	ten or more sovereigns above 1,000 basis points
Cross-border bank claims	BIS locational banking statistics	contraction of more than 10 per cent over four quarters
Commercial bank deposits and borrowings	Federal Reserve H.8 statistical release	—
Use of central bank dollar swap lines	Federal Reserve H.4.1 statistical release	outstanding swaps above US$100 billion
Commercial property prices	BIS commercial property price statistics	fall of more than 20 per cent from peak in two or more major economies
Sovereign gross financing needs	IMF Fiscal Monitor	above 15 per cent of GDP for an emerging-market borrower

12Compounds

Triggers: S05 Legitimacy rupture · Disputes over loss allocation and spending cuts can produce a contested transfer of power in a nation that has lost market access.
S01 Trade bloc rupture · Governments respond to the recession with tariffs, capital restrictions and preference for domestic suppliers.
S11 Debt service reset · A cluster of sovereign defaults creates the pressure for a common creditor framework.
S13 Great-power détente · Shared financial distress has prompted cooperation between the two before
Triggered by: S01 Trade bloc rupture · Loss of critical inputs and export markets reprices exposed equities and credit.
S03 Regional war spillover · A war that closes a sea route raises energy prices and risk premia together.
S09 Cryptographic trust break · Loss of confidence in digital signatures interrupts payments and settlement and prompts withdrawals.
S10 Severe pandemic · A pandemic stops activity and produces a rush for cash, as in March 2020.
S05 Legitimacy rupture · Only where the nation is a reserve-currency issuer or a major financial centre.
S07 Core disaster · Only where the core is a global financial centre. Elsewhere the effect is a wider spread for one sovereign.
S08 AI labour shock · Revenue shortfalls, arrears among professional households and a repricing of labour-intensive services firms weaken sovereign and credit positions.
S15 Clean power threshold · If hydrocarbon assets and exporter sovereign debt are repriced abruptly
S19 Chronic disease advance · Longevity revisions add to the pension liabilities of ageing sovereigns; a contributing pressure, not a cause alone
Amplified by: S08 AI labour shock · Displacement of professional employment raises household and commercial property defaults.
Amplifying trends: Stretched asset valuationsNon-bank finance growthBank funding & deposit mobilitySovereign debt & interest burdenSovereign creditor fragmentationCapital concentration in AICommercial property repricingExternal liquidity buffer requirements
Key trends: Sovereign debt & interest burdenCritical External liquidity buffer requirementsCritical Bank funding & deposit mobilityCritical Fiscal rules & budget credibilityVery high Non-bank finance growthVery high Stretched asset valuationsVery high Trade finance & correspondent banking gapsVery high Commercial property repricingVery high
From GINC Trends: the trends rated Very high or Critical for this scenario, of 250. All S02 trend scores.

13Rating rationale

Rating	Band or level	Why
Likelihood, two years	3Possible	An event meeting this specification in full has occurred once in the past forty years, in 2008. Partial episodes in 2020, 2022 and 2023 were contained within weeks by central bank action. Concentrated technology valuations, leverage outside the banking system and faster deposit movement raise the near-term probability; standing liquidity facilities and higher bank capital lower it. The two-year probability is placed between 1 and 5 per cent.
Likelihood, ten years	4Likely	Over ten years the historical frequency of one full event in forty years implies a probability inside the 5 to 25 per cent band. Public debt and interest costs are higher than before 2008, which leaves less room to absorb private losses, and a larger share of credit is held by funds without access to central bank facilities. The band is not raised further because supervisors test banks against paths of this severity.
Systemic impact	4Severe	After 2008 world output remained several per cent below its earlier trend five years later. This specification sets a smaller equity fall than 2008 and assumes that core government bond and dollar funding markets are kept open, so the loss is placed below that episode: 2.5 to 5 per cent of global output at risk over five years, with structural damage in the nations that lose market access.
National impact	4Severe	A highly exposed nation loses market access while paying for bank support and unemployment. Public salaries and benefits are paid late and imports of fuel and medicines are rationed. Ireland's public debt rose from about 25 to about 120 per cent of GDP after it guaranteed its banks; Sri Lanka rationed fuel and medicines within weeks of default. Damage to essential services and output is severe, and recovery takes years.
Confidence	medium	Severity is well calibrated by 2008, the euro area crisis and supervisory stress tests. Timing, and the number of governments that lose market access, are uncertain.

Source of scores: model-panel-v0.5. Confidence refers to the rating, not the scenario. Calibration sources are listed with the anchors above and on the scenario methodology page.

14Open questions

Contested assumptions for the panel to resolve.

Whether one record can serve both the global event and its national face, or whether the single-nation sovereign funding crisis needs its own likelihood as an idiosyncratic event.
Whether Standard Severe should assume that the major central banks are free to ease, or should carry the inflationary case in which they are not.
How to treat nations with closed capital accounts, where regional exposure is rated High but the funding channel is weak.
Whether 'several governments' should be fixed as a number. The record uses eight, which the specification does not state.

15Commentary

No signed commentary in this build.

16Version and citation

Version: 0.5.0 · active · global-funding-seizure
Change log: 0.5.0 · 9 October 2026 · Rebuilt in the second pass from Global financial crisis: the seizure is specified to reach sovereign borrowers and absorbs the first-pass sovereign funding crisis; onset moved from days to weeks, the equity fall set at 40 per cent and each rating lowered by one step.
Full change log

Rating history

One row per edition. Each edition page is frozen at release; corrections are published as errata.

Edition	Rank	L2y	L10y	Systemic	National	Confidence	Edition view
2027	2	3Possible	4Likely	4Severe	4Severe	medium	Open

Versions

Version	Date	Change
0.5.0	9 October 2026	Rebuilt in the second pass from Global financial crisis: the seizure is specified to reach sovereign borrowers and absorbs the first-pass sovereign funding crisis; onset moved from days to weeks, the equity fall set at 40 per cent and each rating lowered by one step.

Citation and downloads

Cite as

GINC (2027). Scenario S02 A global funding seizure reaches sovereign balance sheets, Scenario Library v0.5. scenarios.ginc.org/scenarios/global-funding-seizure

Content and data are published under CC BY 4.0.

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