Recent improvements in the global financial sector should be regarded with caution, the head of the world’s biggest central bank body said yesterday, ahead of this week’s G20 summit.
Jaime Caruana, general manager of the Bank for International Settlements, said the sector could not afford to slip into complacency about rebounds in the markets after the worst global downturn in decades.
“It is not the right time for complacency,” he told the Financial Times.
“The profile of the recovery is not clear. Obviously things have improved significantly and the main … risks that we had at the beginning of the year have to some extent dissipated,” he said.
“But my sentiment would be that we have to be cautious about this improvement,” he said.
Caruana said it was vital not to rush into knee-jerk reforms, responding to criticism that the bank, which oversees the Basel Committee on Banking Supervision, was moving slowly on overhauling regulation following the crisis.
Key reforms included ensuring banks had higher capital in future, he said.
“It is very important to realize that we are talking about a higher standard of capital that will happen when the recovery is strong enough,” he said.
“We are not trying to interfere with the recovery. The transition is important,” he said.
“But at the same time [we must] not create headwinds for the recovery,” Caruana said.
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