The Bank for International Settlements (BIS), the union of central banks, has warned that there is a high possibility of expos of exposing the problems and vulnerabilities in the global financial system due to the challenges facing the business sector and the deterioration of international political relations. BIS Chief AgustÃn Carstens revealed this in a report released after studying the current state of the global economy. Carstens noted that the biggest challenge currently facing the global economy is US President Donald Trump’s trade policies. He said that increasing tariffs or import duties on goods imported to the US, along with the trade war initiated with other countries and the revision of US trade policies, have brought negative changes to the way the global economy operates.
He said that the global economy is currently in a sensitive state. And that the future is uncertain, which is affecting people’s trust in financial institutions. He noted that among the financial institutions people are questioning are the central banks of countries. Although Trump had previously decided to increase import duties on goods imported to the US, that has been postponed for now. However, Trump has warned that he will start implementing the new import duty policy again on July 9. The BIS report has been released at a time when this deadline is approaching.
Recently, Trump criticized the head of the US central bank, Federal Reserve Chairman Jerome Powell, describing him as “stupid”. When asked about this, Carstens, who has also served as the Governor of the Central Central Bank of Mexico, said that it is common for disagreements to arise between governments and their central banks. The BIS report also highlights the biggest challenges currently facing the global financial system and economy. These include “protectionism” or hindering international trade to protect a country’s own businesses and companies, and “trade fragmentation” or concerns about the breakdown of the existing international trade system, the report noted. Along with this, Carstens’ report noted that the growth rate of the global economy and countries’ national productivity is further weakening.
In addition, the report highlighted the significant challenges posed by the aging of the world’s population, the increase in the elderly population, climate change, and the weakening of “geopolitics” or bilateral relations between countries and international relations. The report also stated that the ability to recover from and resilience to shocks and jolts to the global economy have decreased.
