Wednesday, June 27, 2007

More Risk Ahead?

Another Financial Times' report notes a warning from BIS, Bank for International Settlements:

Interest rates in the world’s leading economies should rise while conditions are good to avert the twin risks of rising inflation and trade imbalances that could destroy the remarkable strength of the world economy, the Bank for International Settlements has warned.

The central banker’s bank, based in Basel, Switzerland, also says that financial innovation may be dangerous, especially the wider distribution of credit risk using asset-backed securities. “More scepticism might be expressed about some of the purported benefits of having new players, new instruments and new business models,” it says in its annual report.

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