Rajan warns of global assets crash
Warning that the current build-up of financial sector imbalances may cause sudden price reversals and sharp spikes in volatility
 "Rajan warns of global assets crash")
Reserve Bank Governor Raghuram Rajan has warned that global markets are at the risk of a “crash”, due to the lingering of competitive loose monetary policies being followed by the developed economies.
Warning that the current build-up of financial sector imbalances may cause sudden price reversals and sharp spikes in volatility, Rajan said, “We are taking a greater chance of having another crash at a time when the world is less capable of bearing the cost”.
In an interview to London-based Central Banking Journal on Wednesday, he said, “Unfortunately, a number of macro-economists have not fully learnt the lessons of the great financial crisis. They still do not pay enough attention — en passant — to the financial sector. Financial sector crises are not as predictable. The risks build up until, wham, it hits you.”
Warning that the current build-up of financial sector imbalances may cause sudden price reversals and sharp spikes in volatility, Rajan said, “We are taking a greater chance of having another crash at a time when the world is less capable of bearing the cost”.
In an interview to London-based Central Banking Journal on Wednesday, he said, “Unfortunately, a number of macro-economists have not fully learnt the lessons of the great financial crisis. They still do not pay enough attention — en passant — to the financial sector. Financial sector crises are not as predictable. The risks build up until, wham, it hits you.”