Risky business: Central bankers must not 'drop the ball'

Despite moderately improving conditions in the developed world, there remains an extraordinary level of central bank sourced liquidity in the market, which brings along a whole set of risks. There will be unintended consequences: misallocation of capital, zombie company instability through the search for yield, asset bubbles, politicians easing back on much-needed reforms, implicit protectionism, as well as the possibility of inflation down the track. Many of these results are to be seen in emerging markets today. Policy risks are bigger than ever. The reaction of bond markets to Ben ...