The Bank of International Settlements has issued a warning that central bank monetary policy has elevated asset prices and reduced market volatility to abnormally low levels.
In its quarterly review, the BIS said financial market volatility spiked higher in August on the back of geopolitical concerns and worries over economic growth, but quickly returned to “exceptional lows” across most asset classes.
“By fostering risk-taking and the search for yield, accommodative monetary policies thus continued to contribute to an environment of elevated asset price valuations and exceptionally subdued volatility,” the BIS said.
From the BIS website:
The mission of the Bank for International Settlements (BIS) is to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.
In broad outline, the BIS pursues its mission by:
* promoting discussion and facilitating collaboration among central banks;
* supporting dialogue with other authorities that are responsible for promoting financial stability;
* conducting research on policy issues confronting central banks and financial supervisory authorities;
* acting as a prime counterparty for central banks in their financial transactions; and
* serving as an agent or trustee in connection with international financial operations.
The head office is in Basel, Switzerland and there are two representative offices: in the Hong Kong Special Administrative Region of the People’s Republic of China and in Mexico City.