BIS chief economist warns of dangers of easy money

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FRANKFURT (Oct 20): The current ultra-expansive monetary policy around the world could pose a threat to financial stability, the chief economist of the Bank of International Settlements (BIS) in Basel warned on Monday.

In an interview with the German daily Die Welt, the chief economist of the Basel-based BIS, Claudio Borio, warned of the dangers of easy money.

"From a global perspective, the current monetary policy could contribute to the dangers for financial stability," Borio said.

"Interest rates are globally too low to guarantee price stability and financial stability," Borio argued.

Companies are not using the cheap cash to invest, the economist said.

"Managers have preferred to use the money to finance takeovers or share repurchase schemes rather than in their own business. That's a clear signal that something is amiss," Borio said.

The BIS, often described as the central bank for central banks, plays an important role in monitoring the movement of money around the world, as a forum for policy by central banks. and as a body which prepares new international banking standards and regulations.