The constant decline in the dollar and the Federal government’s policies of keeping interest rates low has created great speculation in the foreign exchange, property and stock market, and has dramatically affected the prices of assets on a worldwide scale, according to Liu Mingkang, the chairman of the China Banking Regulatory Commission.
Addressing reporters at the International Finance Forum in Beijing today, he said that US government’s measures that indicate that the interest rates won’t be raised for the resumption of growth and maintaining the public’s confidence, are giving rise to speculations in the global market. Liu added that this has created new risks which cannot be underestimated as the global economy tries to emerge from the clutches of recession.
His comments supported Donald Tsang’s view, who said that the US government’s policy of keeping near zero interest rates is giving rise to dicey capital that may lead to the next global slowdown. He added that America was committing the same mistake which Japan had committed in the past by following a zero interest policy and that had lead to the financial crisis in Asia in 1997 and meltdown of U.S. mortgage.
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