BIS chief: Rate rises could trigger Lehman-style event as debt surges

The head of the Bank for International Settlements (BIS) has warned the global financial system is at risk of a second crisis, which could be worse this time around due to higher borrowing in both developed and emerging markets.

Jaime Caruana said investors have become too focused on achieving higher returns and are failed to take into account the risk of monetary tightening including interest rate rises. He suggested as central banks rein in liquidity, the huge private credit boom seen across developed and emerging markets could cause a financial collapse as borrowing costs jump.  Speaking to the Telegraph, he said: "Markets seem to be considering only a very narrow spectrum of potential outcomes. They have become convinced that monetary conditions will remain easy for a very long time, and may be taking more a...