NEW YORK : Some investors and analysts are calling for more coordinated interventions from central banks to restore financial stability, as they fear that tumult in the global banking sector will continue amid rising interest rates.
For Erik Nielsen, group chief economics advisor at UniCredit in London, central banks should not separate monetary policy from financial stability at a time of heightened fears that banking woes could lead to a widespread financial crisis. Others, however, think regulators will be able to ensure financial stability while continuing with their inflation-fighting campaign."We see central banks sticking to a 'separation principle' – using balance sheets and other tools to ensure financial stability while keeping monetary policy focused on reining in inflation," the BlackRock Investment Institute said in a note last week.
"The issue with European banks and big U.S. banks at the moment is confidence. It is not capital," he said in a blog on Friday."Consumers are nervous because they see banks failing and they question whether these issues will spread to other banks and whether or not they should take their deposits out or sell their bank stocks."