This paper, authored by Carmen M. Reinhart and Kenneth S. Rogoff, explores the historical relationship between financial crises, debt, and banking crises. The authors use a comprehensive, long-term historical database covering 70 countries to analyze the cycles underlying serial debt and banking crises. The key findings include: 1. **Private Debt Surges and Banking Crises**: Private debt surges are a recurring precursor to banking crises, often driven by both domestic banking credit growth and external borrowing. Governments often contribute to this stage of the borrowing boom. 2. **Banking Crises and Sovereign Debt Crises**: Banking crises, both domestic and those originating from international financial centers, often precede or accompany sovereign debt crises. These crises help predict sovereign debt crises. 3. **Public Borrowing and Hidden Debts**: Public borrowing accelerates significantly before a sovereign debt crisis, often exceeding documented levels of external debt. Hidden debts, including domestic public debt and private debt that becomes public during the crisis, are significant factors. The paper also discusses the "this time is different" syndrome, where policymakers and investors believe that current economic conditions are different from past crises, leading to a false sense of security. The authors highlight the importance of understanding hidden debts and the role of political economy factors in perpetuating short-termism and crisis risks. Overall, the paper provides a deep analysis of the historical patterns and underlying mechanisms that drive serial debt and banking crises, offering insights into the vulnerabilities and risks associated with financial systems.This paper, authored by Carmen M. Reinhart and Kenneth S. Rogoff, explores the historical relationship between financial crises, debt, and banking crises. The authors use a comprehensive, long-term historical database covering 70 countries to analyze the cycles underlying serial debt and banking crises. The key findings include: 1. **Private Debt Surges and Banking Crises**: Private debt surges are a recurring precursor to banking crises, often driven by both domestic banking credit growth and external borrowing. Governments often contribute to this stage of the borrowing boom. 2. **Banking Crises and Sovereign Debt Crises**: Banking crises, both domestic and those originating from international financial centers, often precede or accompany sovereign debt crises. These crises help predict sovereign debt crises. 3. **Public Borrowing and Hidden Debts**: Public borrowing accelerates significantly before a sovereign debt crisis, often exceeding documented levels of external debt. Hidden debts, including domestic public debt and private debt that becomes public during the crisis, are significant factors. The paper also discusses the "this time is different" syndrome, where policymakers and investors believe that current economic conditions are different from past crises, leading to a false sense of security. The authors highlight the importance of understanding hidden debts and the role of political economy factors in perpetuating short-termism and crisis risks. Overall, the paper provides a deep analysis of the historical patterns and underlying mechanisms that drive serial debt and banking crises, offering insights into the vulnerabilities and risks associated with financial systems.