Chinese official: QE will increase downside risk in the global recovery

Via imarketnews:
The QE2 "will undermine and increase downside risk in the global recovery," said Zhang Tao, director-general of the International Department of the People's Bank of China.

"Undoubtedly this has increased the vulnerability in emerging markets and emerging markets are heading the global recovery," he said, noting that excess liquidity could "end up in an increase in asset prices, asset bubbles or foreign exchange rate fluctuations."

Zheng Xiaosong, director-general of International Department of the Ministry of Finance, said countries with "reserve currencies should bear in mind the impact on the global economy of (their) policies.

"By doing this we can safeguard the stability of capital markets."


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