The Bank of International Settlements (BIS) has published its annual report for 2015, and specifically criticizes the current low interest rate policies of central banks worldwide. Known as the “central bank of central banks,” the BIS stated that now there is simply nowhere to go for the world’s largest financial institutions to combat any further crises, having repeatedly cut interest rates year-on-year.
Claudio Borio, the head of their monetary and economics department, pulled no punches when he stated that “persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties.” Furthermore, he went on to warn of the severe threat posed by further crises in advanced economies, many of whom are at the top of their economic cycle, describing this as the “main risk” we face. The current crisis in Greece is typical, he says, of the “toxic mix” of using private and public debt to solve economic problems, when the answer should lie with structural reforms.
With the world’s population continuing to age, the burden of debt becomes harder to bear. If you are in agreement with this damning self-assessment from the BIS, please Like & Share this post.