BIS: World Economies Could Crash On Scale Not Seen Since Great Depression
I’m always interested in hearing what the Bank for International Settlements has to say. After all, it’s the bank for central banks. According to the London-based online publication Banking Times on June 9 (hat tip WhatReallyHappened.com):
The Bank for International Settlements (BIS), the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.
In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart.
Reporter Gill Montia talked about the bank’s warning of a “Next Great Depression” in detail. Montia wrote:
According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.
The report points out that between March and May of this year, interbank lending continued to show signs of extreme stress and that this could be set to continue well into the future.
The Bank for International Settlements is an international organization which fosters international monetary and financial cooperation and serves as a bank for central banks around the world, including the Federal Reserve. Established on May 17, 1930, it is the world’s oldest international financial organization.
Source:
“Central bank body warns of Great Depression”
Gill Montia
Banking Times (UK), June 9, 2008
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