A/HRC/43/45 to sustainably enjoy the debtor’s human rights), abusive contractual terms and collection practices become a burden and a threat for individuals or households, potentially quickly turning into a trap for many, putting the realization of human rights in jeopardy. In this regard, the role of the State (and of private actors) is vital to level off the inherent power imbalance between contractual parties for an effective human rights protection effort. II. Private debt, and macro-economy and public debt 6. Heavily privatized credit creation and financial intermediation have been the main driving forces of the steep increase in private debt in developing economies since the 1980s. 5 After the 2008 financial crisis, shadow banking and a range of other credit activities have continued to expand, despite efforts made in regulations. According to UNCTAD, since then, non-bank financial intermediation has grown twice as rapidly as conventional and public banking, its share accounting for 48.2 per cent of all global financial assets, surpassing that (43.9 per cent) held by commercial banks and public financial institutions. 7. Even though public indebtedness in developing countries rose to 51 per cent in 2017, the unprecedented explosion of private debt should clearly raise the loudest alarm bells. While a large portion of this private debt can be attributed to the access of high-income developing countries to deeper domestic financial and banking systems and easier access to international financial markets, upward trends in overall indebtedness have also been observed in both middle- and low-income developing countries since 2012. For example, the ratio of public debt to GDP of high-income countries went from 34 per cent in 2008 to 50 per cent in 2017, their overall indebtedness reaching 215 per cent of GDP, largely due to the sharp increase in private debt in the aftermath of the global financial crisis. 6 Despite the growing trend in household debt witnessed in emerging economies, rising from 25.4 per cent in 2011 to 40 per cent in 2018, lending to non-financial corporations also played a major role in the overall increase in private non-financial debt. 8. A number of studies have pointed to a close relationship between the accumulation of private debt, macroeconomic instability and sovereign debt crises: private debt booms in some countries have been associated with economic downturns and often serve as an accurate indicator of financial instability.7 In the same vein, increasing inequality may lead to private overborrowing and overlending, which can in turn have an impact on financial stability, potentially resulting in a debt crisis over time.8 9. Individual and household debt accounts for a significant portion of private debt in most countries, and may be the result of a series of economic measures, such as privatization or austerity measures, or labour market flexibilization, which drive down the wages of unskilled workers and fuel inequality. 9 For instance, even though unemployment is at its lowest in nearly four decades in the countries belonging to the Organization for Economic Cooperation and Development (OECD), real wages have not picked up or have grown at a pace slower than that of the decade prior to the 2008 financial crisis. 10 In the meantime, the costs of health care, housing, food and education have risen, while social benefits have been cut or reduced. 10. As the gap between nominal income and cash needs has widened, households have increasingly turned to debt to fulfil their consumption needs. Similar problems were faced by developing countries, where the expansion of consumer credit has significantly contributed to GDP growth while many consumers have fallen into a cycle of overindebtedness and 5 6 7 8 9 10 4 UNCTAD, Trade and Development Report 2019, p. 76. Ibid, p. 77. Juan Pablo Bohoslavsky, “Economic inequality, debt crises and human rights”, Yale Journal of International Law, vol. 41, No. 2 (2016). A/HRC/31/60, para. 22. Jean-Michel Servet and Hadrien Saiag, “Household over-indebtedness in Northern and Southern countries: A macro-perspective”, Microfinance, Debt and Over-Indebtedness, Isabelle Guérin et al (eds) (Routledge, 2014), p. 26. OECD, Economic Outlook, vol. 2019, No. 1, p. 8.