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Asset bubbles could deflate global recovery: Analysts

Published on Jul 27, 2014 12:29 PM
Estate agents boards are lined up outside houses in south London June 3, 2014. London real-estate is now on average 20 per cent more expensive than before the onset of the financial crisis. -- PHOTO: REUTERS

PARIS (AFP) - In a world still struggling to shake off the worst financial crisis for a generation, many economists are worrying that new asset bubbles are already threatening to derail the tepid global recovery.

Concern has been rising that investors are paying too much for securities in a search for good returns when interest rates are hovering near record lows, creating the bubble conditions for a new market crash.

The Bank of International Settlements (BIS) warned at the end of last month that financial markets were running ahead of economic reality, and called for governments to stop new debt-driven overspending.

The BIS, the so-called central bank of central banks, called for policies that "lean more deliberately and persistently against financial booms and ease less aggressively and persistently during busts".

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