Claudia Buch, the deputy president of the Bundesbank, told CNBC that there were “misaligned incentives” in the financial system and detailed her current concerns from ultra-low borrowing costs.
“It’s very difficult to identify bubbles, this is something we have learned from the crisis. If anything, looking at corporate bonds, syndicated loans, that’s an area where we are seeing tendencies of overvaluation,” she said.
“We see less so in equity markets but of course this statement is only as good as the underlying model we’re using.”
The ECB is buying fixed income assets of this kind in an attempt to combat low inflation in the euro zone which has helped to sap growth in some of the largest economies in the region. Buch claimed that her words were not a statement on this monetary policy. Nonetheless, she added that investors needed to be aware of the areas of overvaluation which might have an impact on financial stability.