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IPFS News Link • Central Banks/Banking

"Who Moved My Punch Bowl?...

• http://www.zerohedge.com, Tyler Durden

To assess financial stability risks, Fed Vice-Chair Fischer had recently highlighted the Fed's framework in a recent speech in which he highlighted the "four broad cyclical vulnerabilities: (1) financial sector leverage, (2) non-financial sector borrowing, (3) liquidity and maturity transformation, and (4) asset valuation pressures"."

As a result, "financial stability risks will hold the key: In the 2004-07 episode, as inflation was well-behaved, the pace of monetary tightening by central banks was slower than warranted, which resulted in a build-up of financial stability risks as financial conditions stayed easy, private sector leverage in both the non-financial and financial sector rose sharply and asset markets were buoyant."


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