Faith in Central Banks’ Healing Powers Faltering: BIS

by Marc Jones
Reuters.com

Financial markets’ shaky start to the year shows they are losing faith in the “healing powers” of central banks, the Bank for International Settlements (BIS) said on Sunday while voicing concerns over sub-zero interest rates and emerging economies.

The Swiss-based organization, which fosters cooperation between central banks in the pursuit of monetary and financial stability, said that recent worries over China’s economy, oil and commodity prices and some European banks had come as fundamental shifts take place in the global economy.

International bank-to-bank lending is contracting for the first time in two years, the use of dollar-denominated debt to drive growth in emerging markets has ground to a halt on a strengthening of the currency that has also served to send U.S. companies rushing to borrow in euros.

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