Banks stash for cushioning
(28 June 2011 – Global) The Bank for International Settlements (BIS) has cautioned that investors should prepare for smaller profit margins as banks stash away more capital to avoid another global financial crisis (GFC).
BIS also advised central banks around the world that interest rates may need to rise to bring inflation under control.
It said rates might have to be raised because 'tighter global monetary policy is needed in order to contain inflation pressures and ward off financial stability risks.'
Jaime Caruana, the bank's general manager, said the global financial crisis of 2008-2009 still casts long shadows, but already there were signs of a return to excessive risk-taking.
He warned of threats posed by unsustainable public debt, soaring energy and commodity prices and inflation that was already hitting many countries and threatening others.
'While encouraging investors to take some risk was part of crisis management, there are signs that, in some areas, investors may be going too far again,' he said.
It said rates might have to be raised because 'tighter global monetary policy is needed in order to contain inflation pressures and ward off financial stability risks.'
Jaime Caruana, the bank's general manager, said the global financial crisis of 2008-2009 still casts long shadows, but already there were signs of a return to excessive risk-taking.
He warned of threats posed by unsustainable public debt, soaring energy and commodity prices and inflation that was already hitting many countries and threatening others.
'While encouraging investors to take some risk was part of crisis management, there are signs that, in some areas, investors may be going too far again,' he said.
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