A prolonged period of low interest rates has posed challenges to financial stability by encouraging the buildup of excesses in financial risk-taking, the International Monetary Fund (IMF) said Wednesday in a newly- released report.

Six years after the start of the financial crisis, the global recovery continues to rely heavily on accommodative monetary policies in advanced economies, which have encouraged more speculation in the financial market than benefits in the real economy, the Washington-based IMF said in its latest Global Financial Stability Report.

"This has resulted in elevated prices across a range of financial assets, credit spreads too narrow to compensate for default risks in some segments, and, until recently, record-low volatility, suggesting that investors are complacent," the report noted.

"Policymakers are facing a new global imbalance: not enough economic risk-taking in support of growth, but increasing excesses in financial risk-taking posing stability challenges," said Jose Vinals, director of the IMF's monetary and capital markets department, at a press conference.

He added that global banks are safer but may not be strong enough to vigorously support the recovery, and risks are shifting to the shadow banking system in the form of rising market and liquidity risks. "If left unaddressed, these risks could compromise global financial stability," he warned.

"The best way to address the new global imbalance between economic and financial risk-taking is to adopt policies that transmit the benefits of monetary policy to the real economy, and to address financial excesses through well-designed micro- and macro-prudential measures," Vinals said.

More comprehensive monitoring and reporting of leverage in non- bank sectors and in emerging market companies would also help identify potential vulnerabilities, the report added.
(Xinhua)