30 Jun 2014
BIS warns on disconnect between markets’ buoyancy and underlying economic developments
FXStreet (Bali) - In its annual report published Sunday, the Bank for International Settlements said that regulators need to be now more than ever in a watchful position as there are worrying signs of property/credit.
“Overall, it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally. Financial markets are euphoric, in the grip of an aggressive search for yield…and yet investment in the real economy remains weak while the macroeconomic and geopolitical outlook is still highly uncertain” BIS notes.
BIS said there were early warning signals suggesting vulnerabilities building in financial systems, highlighting emerging economies and Swizerland as the regions with a notably high credit to GDP, well above their long-term historical standards. BIS took note of the widening gap between real residential property prices and historical trend.
“Overall, it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally. Financial markets are euphoric, in the grip of an aggressive search for yield…and yet investment in the real economy remains weak while the macroeconomic and geopolitical outlook is still highly uncertain” BIS notes.
BIS said there were early warning signals suggesting vulnerabilities building in financial systems, highlighting emerging economies and Swizerland as the regions with a notably high credit to GDP, well above their long-term historical standards. BIS took note of the widening gap between real residential property prices and historical trend.