National economies around the world are living on borrowed time lent to them by central banks, according to BIS.
The Bank for International Settlements is a kind of
central bank for the central banks themselves, and while many may still blame the banking services sector for the economic turbulence that has been seen acrossEuropeand beyond, BIS says it can do little more to help restore stability.
In its 83rd Annual Report 2012/13, BIS says the central banks themselves have “prevented financial collapse” through their actions taken since 2007, which is even before terms like ‘credit crunch’ and ‘double-dip recession’ entered into common parlance.
“Further accommodation is borrowing time for others to act,” the report adds, “but the time must be used wisely.”
BIS is now looking to governments to reform economic and financial systems to restore growth to national economies.
“The focus of action must be on balance-sheet repair, fiscal sustainability and, most of all, the economic and financial reforms needed to return economies to the real growth paths authorities and the public both want and expect,” the introduction to the Annual Report reads.
Calling for an end to the ‘whatever it takes’ attitude of central banks, which have been relying on a combination of tight monetary policy and quantitative easing to maintain nationwide liquidity in finances, BIS says the onus of responsibility is on companies and even individual households to make best use of this ‘borrowed time’.
“Households and firms have to complete the repair of their balance sheets,” it states. “Governments must redouble their efforts to ensure the sustainability of their finances.”
Only through such concerted “forceful efforts” will sustainable, strong growth be restored to economies, it concludes.