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Global Imbalances Could Fuel Financial Stability Risks, Says BoC Governor Macklem
Macklem said excessive capital inflows into the United States could stretch valuations in equities and credit and trigger a painful correction.
- On Tuesday, Bank of Canada Governor Tiff Macklem warned in a Paris speech that over-investment in the United States is creating broader correction risks for the global financial system.
- Macklem attributed these imbalances to a combination of Europe's lack of investment, lower savings in the United States, and weak consumption in China, with the dominance of the United States dollar allowing distortions to deepen.
- Massive capital inflows could lead to asset bubbles similar to the 2008-09 financial crisis, the governor warned, with distortions potentially emerging in emerging technology sectors.
- Rejecting tariffs and currency devaluations as tools, Macklem stated, "The mutual harm of trade wars lowers growth and living standards for everyone," urging leaders toward open trade cooperation.
- As financial systems evolve, higher banking standards have pushed vulnerabilities toward non-bank intermediaries, creating new challenges for global regulators since these institutions lack equivalent reporting requirements.
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Bank of Canada Governor Warns Global ‘Imbalances’ Threaten Economy
Bank of Canada Governor Tiff Macklem says “imbalances” among major economic powers, including persistent trade surpluses in China and over-investment in the United States, pose growing risks to the global economy. Speaking in Paris on June 23, Macklem pointed to China’s persistent trade surpluses and high savings rate, the United States’ large trade deficits financed by capital inflows and low national saving, and Europe’s weak investment and pr…
·New York, United States
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The Toronto Star+4 Reposted by 4 other sources
Bank of Canada governor raises alarm over global imbalances in Paris speech
The governor of the Bank of Canada is warning about persistent imbalances between major economic powers in a rare speech to a business audience overseas.
·Toronto, Canada
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Total News Sources14
Leaning Left3Leaning Right2Center5Last UpdatedBias Distribution50% Center
Bias Distribution
- 50% of the sources are Center
50% Center
L 30%
C 50%
R 20%
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