‘Low for long’ endangers stability, warns BIS committee
Some banks could face solvency issues if faced with a “snapback”, warns Philip Lowe
The period of ultra-low interest rates since the financial crisis is undermining stability at some financial firms, and banks may be vulnerable if conditions take a turn for the worse, according to new work by a Basel-based committee.
The report, prepared by the Committee on the Global Financial System, finds insurers and private pension funds are especially vulnerable to a continued period of low rates. But banks too could prove under-prepared in the event of a violent “snapback” in interest
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