I'm leaning toward the former.
From Real Time Economics:
It’s a refrain that is being heard more and more often, especially from central bankers: the world is expecting too much of them.Here's Caruana's London speech:
The latest to take up the refrain is Jaime Caruana, general manager of the Bank for International Settlements, who warned in an unusually frank speech in London that, while the ultra-low interest rates and ultra-easy monetary policy adopted by advanced economy central banks might have been the right response to the crisis when it broke, they are looking increasingly dangerous the longer they last.
“A vicious circle can develop, with a widening gap between what central banks are expected to deliver and what they actually can deliver,” Mr. Caruana said. “This may ultimately undermine their credibility and, with it, their legitimacy and effectiveness.”
Low rates may have helped keep banks alive and keep a roof over the heads of overextended borrowers—but they are threatening the ability of insurance and pension funds to meet their commitments, and tempting them into all kinds of wrong investment decisions in the meantime. Although he didn’t spell it out, he painted a picture of a massive and stealthy transfer of wealth from savers to borrowers.
It’s easy to dismiss Mr. Caruana’s opinions as those of an unaccountable technocrat, handed down from an ivory tower in the Swiss city of Basel. But they matter, precisely for that reason. Mr. Caruana is no disgruntled outvoted hawk on a policy-setting council, trying desperately to set the record straight after being outvoted. Rather, he’s the mouthpiece for a global college of central bankers, almost all of whom find themselves under intense pressure from their national governments to keep things ticking over while they try to repair the economy.
His views also matter for another reason: the BIS is one of the few international financial institutions (some say the only one) to see the financial crisis coming and to issue clear warnings ahead of time....MORE
Hitting the limits of "outside the box" thinking? Monetary policy in the crisis and beyond
In 2011 I tried to communicate my thinking on the BIS, note the dates:
Why You Really, Really Want to Listen to the Bank for International Settlements
On June 26, 2007 (i.e. pre-"Quant-quake", pre-Bear Stearns, pre-ought-eight-near-catastrohe) we posted a short little piece:See also:
"(Off-topic) Banks' banker warns of downturn":
On April 28, 2010 it was Greece: "Exposure fears weigh on French, German banks"THE risk of a 1930s-style economic slump has been heightened by "euphoric" markets tapping cheap global credit, one of the world's pre-eminent financial institutions has said.In its annual report, the Bank for International Settlements noted that the conditions that led to the Great Depression of the 1930s and the Asian crises in the 1990s reflected the current environment.From The Age
From MarketWatch:
Banks with local subsidiaries, government-lending exposure most at riskBanks in France and Germany have the biggest exposure to Greece of non-Greek lenders are also heavily exposed to other potentially at-risk countries, with those firms that operate local subsidiaries or with big local-authority funding activities likely to face the heaviest losses, analysts said.There is a reason the BIS is known as the "Central banker's central bank".
The latest figures from the Bank for International Settlements show French banks have $75.2 billion of exposure to Greek borrowers, while the industry in Germany has an exposure of $45 billion. The U.K. trails a relatively distant third, with exposure of $15.1 billion....
Here's their website. I try to visit a couple times per month.
Dec. 2012
BIS: "Global safe assets"
June 2008
BIS: Don't Worry, Inflation Not a Problem Because Global Economy Will Crash
