Global crisis likely within next 5 years – economist
The world hasn’t fully recovered from the problems of 2008 which means another crisis is possible, says Director-General of the China Banking Regulatory Commission Min Liao.
"It is likely that the world will face another global financial crisis in the next five years. The reason lies in the fact that many of the problems behind the 2008 crisis remain unsolved. The fragility is still there, for instance in shadowing banking, high indebtedness, a lack of structural reform, the sustainability of emerging markets, and high leverage," Liao said in an interview at the Summit on the Global Agenda of the World Economic Forum.
Billionaires in the world double since global crisis - Oxfam http://t.co/clfRekhF2fpic.twitter.com/hHOx3xPUXn— RT (@RT_com) October 30, 2014
He said the super low-rate environment delayed structural reforms, and market discipline was breached.
“The real economy cannot recover to the pre-crisis level in the foreseeable future, and it remains uncertain whether the intensified regulation can control risks from shadow banking and disruptive technologies. Therefore, the next crisis will probably catch us unprepared once more,” said the economist.
Liao urged the tightening of international regulations for shadow banking, which he sees as a threat to the global economy.
"China’s recent stock market turmoil testified to the risk amplifying effect of shadow banking, which is armed with new technologies. The concern is the same in the US and Europe," he added.