Economy

Central bankers must devise strategy for return to normal policy, BIS head says

imageEconomy9 hours ago (May 27, 2020 09:55AM ET)

(C) Reuters. Headquarters of the Bank for International Settlements are seen in Basel

By Brenna Hughes Neghaiwi

ZURICH (Reuters) – Central bankers must work to get monetary policy back to normal and create an exit strategy from aggressive measures “as soon as possible” to counteract high debt worldwide, the general manager of the Bank for International Settlements said on Wednesday.

A weak economic recovery and high levels of debt have persisted since the 2008-2009 financial crisis, and were only gradually being overcome, Agustin Carstens said during a virtual discussion hosted by Swiss bank UBS (S:UBSG).

Now, “this recession induced by the pandemic is putting a halt to the process of reordering,” Carstens said.

“More debt will be created and therefore additional efforts need to be put in place so that at some point in the future, monetary policy can return to a new normal,” Carstens said.

Aggressive measures undertaken by central banks and governments had preempted “disastrous” economic impact from the coronavirus pandemic, precluding a more difficult recovery down the road, he said. But high levels of debt, particularly government debt, would need to be reigned in eventually.

“At this very early stage, we have to start thinking about how to implement and make possible an exit strategy,” he said, adding such a strategy should be established as soon as possible. “At some point, central banks should start sending signals this will not last forever.”

Referring to the malaise of low growth across the globe, Carstens urged borders be kept open to stimulate trade and growth, calling tensions between China and the United States potentially costly for the future world economy.

“Of course, the dimension of China against the U.S. does not help. Those are the two largest economies in the world,” he said. “We do not need that type of noise at this particular stage.”

Central bankers must devise strategy for return to normal policy, BIS head says

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

Your daily news source covering investing ideas, market stocks, business, retirement tips from Wall St. to Silicon Valley.

Disclaimer:

TheProficientInvestor.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2020 TheProficientInvestor. All Rights Reserved.

To Top