The phrase "balance of terror" is usually, but not invariably,[1][2][3][4] used in reference to the nuclear arms race between the United States and the Soviet Union during the Cold War.
It describes the tenuous peace that existed between the two countries as a result of both governments being terrified at the prospect of a world-destroying nuclear war.
The atomic bomb created a new political reality, in which two superpowers had the ability to destroy each other and at least gravely damage all of human civilization.
The obstacle to war between the communists and capitalists was no longer the fear that the other side was more powerful, but rather the realization that nuclear arsenals were now large enough and deadly enough that winning would still likely result in the destruction of one's own country and perhaps the rest of the world as well.
Lawrence Summers, after the financial meltdown of 2008, adopted the term as appropriate for the situation of a 'financial balance of terror' in global markets.