International Reuters
By Marc Jones
LONDON (Reuters) – The global economic policy urgently needs a rebalance, said Sunday the Bank for International Settlements (BIS), as the world faces a “risky trinity” composed of a high debt, low productivity growth and a diminishing firepower the major central banks.
the BPI, a body that groups the major central banks around the world, said in its annual report that the global economy was very exposed, even before the referendum on Thursday in UK sealed their exit from the European Union.
“There are worrying developments, a sort of” trinity of risk ‘ “, said the head of monetary and economic department of the BIS, Claudio Borio.
“the growth of unusually low productivity, which casts a shadow on a future improvement in living standards; levels historically high global debt that raise risks for financial stability, and a policy very narrow maneuver, “explained the company among its concerns.
The BIS said the global economy can not afford to rely any longer on a model of growth fueled by debt, which has led to the current situation.
despite some interest rates below zero and billions of dollars in stimulus, banks central Europe and Japan are struggling to accelerating inflation and growth. the markets have grown accustomed to these stimuli, but are increasingly worried that the fire power runs out.
“if this situation is stretched to the point of shaking the confidence of the people on the formulation of monetary policies, the consequences for financial markets and the economy could I be serious, “he said.
in another speech, the head of the BIS, Jaime Caruana, said that major central banks will limit the market turmoil as much as possible after the British referendum.
“there will likely be a period of uncertainty and adjustment,” Caruana said in the text of a speech to be released on Sunday. “With good cooperation worldwide, I am sure that uncertainty can be contained.”
(Reporting by Marc Jones. Additional reporting by Francois Murphy in Vienna. Edited in Spanish by Rodrigo Charme)
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