Too many people are looking for the BIG killing instead of the meat and potatoes..World economy menaced by too much financial risk: IMF
Published Bangkok Post: Published: 8 Oct 2014 at 21.44 LINK
WASHINGTON - The world economy needs more productive investment and less in speculative assets, which in many cases are now overvalued and pose big stability risks, the International Monetary Fund said Wednesday.
Jose Vinals, the IMF's top financial counsellor, said that not enough of the easy money pumped into economies by advanced countries' central banks is going into economic activities that support growth.
Instead, too much is going into financial risk-taking that poses challenges to global financial stability, he said, unveiling the IMF's newest assessment of financial risks in the world economy.
Vinals said the world economy is at risk from "the buildup of certain excesses in financial risk taking." Many assets are "richly valued" and "way out of line from fundamentals."
In addition, a lot of risk capital has flowed into emerging-market economies -- $4 trillion in their equities and bonds -- that are more vulnerable to sharp shifts in the direction of flows.
"All of this has the potential of decompressing," Vinals said.