Expansion, Spain
The Fed president warned today of the risks in the stock and bond markets in an environment of low interest rates. Janet Yellen also said that market valuations are generally very high, and has stated that there are potential risks in that market.
In this sense, Yellen said the Fed is also aware that there could be a sharp rise in long-term rates when the body decides to raise interest rates.
However, he said that in his opinion, the risks to financial stability are moderate. “We’re not seeing a rapid credit growth and an increase in maturity transformation,” which are some of the characteristics of the bubbles.
On the other hand, the president has highlighted the “significant progress” made by regulatory agencies to deal with the risks of “distorted incentives” that were at the origin of the crisis in 2008.
“I think that we and other regulatory agencies have made significant progress to time to address the incentive problems in the financial sector, especially banking, “said Yellen.
In a meeting with Christine Lagarde, director of the IMF, the president of the US Fed, he explained which unfortunately “in the years before the crisis, banks took too many risks that could neither measure nor manage.”
Meanwhile, Lagarde noted that besides the emphasis on regulation, should also work to strengthen the entrepreneurial culture in the world of finance.
The director of the IMF also criticized the “myopic” culture of compensation based on short-term profit “instead of sustainable benefits “which increases the excessive risk taking.
” We must build a financial system that is at once more ethical and oriented towards the needs of the real economy, a financial system that serves the society and not vice versa, “he said Yellen
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