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http://www.nzherald.co.nz/busine ... p;objectid=11306873
Another crash in global asset prices could be brewing according to Raghuram Rajan, Governor of the Reserve Bank of India.
In an interview with the Central Banking Journal, Mr Rajan warned yesterday that economists are "not recognising the overall build-up of risks" in the international financial system. He added: "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's views on financial stability hold particular weight because in 2005, when he was chief economist of the International Monetary Fund, he gave a speech in the US at the influential Jackson Hole conference of central bankers, warning that an explosion in financial innovation had made the world riskier, rather than safer.
Mr Rajan's views were dismissed at the time as "luddite" by the former US Treasury Secretary Larry Summers, but they were subsequently vindicated by the global financial crisis three years later, which panned out much as he had predicted.
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