27 Jun 2011

Super bank's warning on world financial stability

7:03 pm on 27 June 2011

A global banking organisation is warning that low interest rates across the globe pose a threat to world financial stability.

The Bank for International Settlements, which is the bank for central banks, says the low cost of borrowing has resulted in a credit and property price boom that is fuelling inflation, especially in emerging economies.

Central banks across the globe have cut interest rates in an attempt to boost growth after the 2008 financial crisis.

But the BIS says the policy may prove to be counter productive and creative financial distortions.

The bank says the policy has pushed up the cost of living and threatened to derail growth in many developing nations.

It says the central banks need to deal with the situation by changing their policies.