FSB chairman: Risk of sharp reversal remains

WASHINGTON: The world has adjusted well to divergent growth and monetary policy expectations but the risk of a “sharp and disorderly reversal” in financial markets remains, Financial Stability Board (FSB) chairman Mark Carney said.

“The risk of a sharp and disorderly reversal remains, given compressed credit and liquidity risk premia,” Carney, whose FSB oversees the global financial system, said in a statement to the International Monetary Fund’s steering committee. Carney, who is governor of the Bank of England, said market participants needed to be mindful of the risk of diminished market liquidity, asset price discontinuities, and contagion across markets.