Wolfgang Schäuble, the outgoing German finance minister, warned in an FT interview last week that ‘economistsudall over the world are concerned about the increased risks arising from the accumulation of more and moreudliquidity and the growth of public and private debt.’udThis follows an assessment by the Bank of International Settlements, whose chief economist, Claudio Borio, hasudtied inflated asset values to loose monetary policy: ‘We do not fully understand the factors at work. But surely the unprecedented gradual pace of monetary policy normalisation has played a role. Another factor could be market participants’ belief that central banks will not remain on the sidelines should unwarranted market tensions rise. All this underlines how much asset prices appear to depend on the very low bond yields that have prevailed for so long.’
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