Photo: Bloomberg
Photo: Bloomberg

Antidote to exuberance

BIS has once again pointed out that the global hunt for yields has created some very loose conditions in credit markets

One of the few global institutions that came out of the financial crisis with its reputation intact was the Bank for International Settlements (BIS). It had warned well before the implosion of Lehman Brothers in September 2008 that the world was headed for trouble.

In its latest quarterly review, BIS has once again pointed out that the global hunt for yields has created some of the most loose conditions in credit markets since even before the financial crisis. This comes on top of several warnings by BIS that interest rates across the world are too low to foster financial stability. It is only in recent months that emerging markets have begun to raise rates to protect their currencies.

The Indian equity market is setting new records and the rupee has rallied despite a weak economy and political uncertainty. The BIS analysis of risks deserves attention when investors are so exuberant.

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