European Central Bank (ECB) President Mario Draghi (left) speaks during a
press conference following the Governing Council Meeting, on October
22, 2015 in Malta. A case in point is the reaction this week to Mr
Draghi’s latest stimulus package, which sparked a broad sell-off from
disappointed investors who said the measures did not go far enough.
PHOTO | AFP
ZURICH
The Bank for
International Settlements (BIS) issued a warning on Sunday over an
“uneasy calm” within financial markets, noting that the global economy
remains vulnerable to serious disruptions.
The BIS —
known as the central bank of central banks — made the call in its
quarterly report, which is closely watched by investors.
In
August and September, markets were shaken after serious concerns
emerged about the health of leading emerging economies, especially
China.
Interventions from monetary authorities
succeeded in stabilising markets to a degree, but the head of the
monetary and economic division at the BIS, Claudio Borio, cautioned
against being lulled into a false sense of security.
“The present calm is fragile,” Borio said.
He
pointed specifically to slowing capital flows and persistent signs of
trouble in Brazil and Russia, even if China appears to have stabilised
in part.
“In this context, it’s hard to see the current calm as anything other than uneasy,” Borio said.
Emphasising
the uncertainty that continues to affect financial markets, Borio noted
that investors still remain extremely sensitive to even the slightest
surprise in actions from central bankers.
A case in
point is the reaction this week to European Central Bank (ECB) Chief
Mario Draghi’s latest stimulus package, which sparked a broad sell-off
from disappointed investors who said the measures did not go far enough.
Senior ECB officials blamed the disappointment on investors who they say misjudged the ECB’s expected actions.
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