Rajan and Weber: central banks may fail next crisis test
Heavyweight economists say central banks could find themselves intervening at next major liquidity crisis
Central banks may not yet be in a position to trust post-crisis reforms enough to allow them to be tested in a crisis, economists Raghuram Rajan and Axel Weber have warned.
Recent years have seen “extremely high” global liquidity, former Reserve Bank of India governor Rajan told a session at an International Monetary Fund conference on April 20. The problem with liquidity is it tends to encourage the build-up of debt, he said – but what happens “when the liquidity train stops”?
Rajan suggested
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