Menon pointed out that the fines imposed on the banks involved in the 1MDB case were the “heaviest aggregate financial penalty to date”. The big risk is that excesses built up during the long period of low interest rates could unwind in a disorderly fashion as US interest rates continue rising. Notably, debt levels in some emerging market countries have risen significantly during the era of low interest rates. “This is a source of potential vulnerability as interest rates rise,” Menon says. Despite Menon’s relatively positive prognosis on the global economy, some local economists see MAS maintaining its zero-appreciation policy for the Singapore dollar.

Source: The Edge Markets July 05, 2017 09:45 UTC