Central banks should be aware of asset bubbles: IMF

Central banks should be aware of asset bubbles: IMF

The International Monetary Fund is warning of the slowing global economic recovery... and calling for aggressive measures to stave off a recession.

But many policymakers and economists around the world are worried... about inflated asset prices... that could stir up another financial shock in the future.

Song Ji-sun reports.
At the IMF′s semi-annual meetings that wrapped up over the weekend,... global leaders sounded an alarm about the slowing world economy.

On top of this, economists and policymakers, and even some investors, warned that expansionary monetary policies could trigger a global financial crisis.

They pointed to inflated asset prices and the increasing debt levels of many countries.
Bond markets in the eurozone are booming and China′s debt is hovering at a record high despite slowing growth.

Share prices in the U.S. have also soared in recent months, although there was a sharp fall last week.
Still, the European Central Bank is pressuring its member countries to buy government bonds in the eurozone... which would trigger even more of a global buying frenzy for the bonds.

Chief economists at major institutions say central bankers need to be more aware of asset bubbles and act accordingly.

According to a report by the IMF, asset management firms have increased their purchases of bonds from emerging markets to nearly two trillion dollars... from 265 billion dollars in the early 2000s.

Regulators worry that retail investors will pull their money out at the same time when U.S. interest rates rise, triggering another market convulsion in emerging economies.

The Federal Reserve is set to end its current bond-buying program this month.
Its next step would be raising its near-zero rate... probably in mid-2015.

The IMF also called on central banks to be careful when communicating changes in policy... in order to avoid financial market shocks.

Song Ji-sun, Arirang News.





https://www.youtube.com/watch?v=0dO4EVGRAAU