Andy Haldane, the Bank of England’s executive director for financial stability, believes the biggest risk to the global financial system is a “disorderly” bursting of the bond bubble created by quantitative easing.
He told the Treasury Select Committee on Wednesday that bond market had seen “shades of that” in the spike in bond yields around the globe after the US Federal Reserve said it was looking to taper off its massive stimulus.
“We have intentionally blown the biggest government bond bubble in history,” he said at hearing on the reappointment of officials to the Financial Policy Committee, created to monitor broad risks to the financial system.
Following the collapse of Lehman Brothers in 2008, central banks in the US and Britain flooded markets with cash to revive their economies and avert a collapse of the world financial system.