Global economy caught in 'vicious cycle', warns BIS

Sydney, June 25 (ANI): The global economy is stuck in a 'vicious cycle', with advanced economies struggling with debt and emerging economies growing strongly, but facing risks of boom and bust, the global organization of central banks, Bank for International Settlements (BIS), has warned.

In its annual report, the BIS said governments, banks and households struggling with too much debt are dragging down the world's economy, and added that more needs to be done to make the banking system safer.

According to news.com.au, the BIS, in its 82nd annual report, said: "The world is now five years on from the outbreak of the financial crisis, yet the global economy is still unbalanced and seemingly becoming more so as interacting weaknesses continue to amplify each other".

Governments have put billions into rescuing banks and central banks have slashed interest rates.This has left an uneven and fragile recovery, with high unemployment and increased levels of government debt afflicting developed economies.

Meanwhile, the 17 countries that use the Euro have sunk into a crisis over excessive government debt.The BIS said that the aftermath is that governments, banks and consumers are all trying to cut back on debt at the same time, magnifying each other's problem.The report also emphasised the need to increase the safety of the banking system by pushing banks to be responsible for their losses, add to their financial buffers and avoid risky practices. (ANI)