Bank of England governor warns of liquidity storm as currency system turns upside down

Section:

By Ambrose Evans-Pritchard and Szu Ping Chan
The Telegraph, London
Saturday, January 24, 2015

DAVOS, Switzerland -- The governor of the Bank of England has warned markets to brace for possible trouble in 2015 as the US Federal Reserve tightens monetary policy and liquidity evaporates, fearing that the new financial order has yet to face its first real test.

Mark Carney said diverging monetary policies in the US, Britain, Europe, and Japan may set off further currency turbulence and "test capital flows across the global economy, including to emerging markets."

It is the latest sign that officials at Threadneedle Street are worried about the global fallout from the rising dollar, which poses a mounting threat to companies in the developing world that have borrowed up to $9 trillion in US dollars.

Mr Carney said regulators have cleaned up the banks and tried to prepare for the tectonic shift taking place in the international currency structure but major risks remain.

"This will test the resilience of that new financial system. It has a potential feedback and we have to be aware of that," he told an elite group of central bankers at the World Economic Forum. ...

... For the remainder of the report:

http://www.telegraph.co.uk/finance/mark-carney/11367570/Mark-Carney-warn...



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