The world is at risk of another financial crash following a steep rise in asset prices, according to Raghuram Rajan, governor of the Reserve Bank of India – and one of the few people to have warned of the last financial crisis.
“Some of our macroeconomists are not recognising the overall build-up of risks,” Mr Rajan, a former chief economist at the International Monetary Fund, said in an interview in the Central Banking Journal. “We are taking a greater chance of having another crash at a time when the world is less capable of bearing the cost.”
Mr Rajan – whose words carry weight because he issued a warning about risk-taking in the financial sector three years before the 2008 financial crisis and the collapse of Lehman Brothers – expressed “alarm” about the build-up of financial sector imbalances.
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