Experts: Next global crisis inevitable

Baku. 22 November. REPORT.AZ/ Although stability in the global economy seems to have been provided at the first glance, all the necessary conditions have been created for the global financial crisis to occur.

Report informs citing the Russian media, continuation of abnormal operations in global financial markets can lead to a crisis.

Thus, although interest rate of 2-year bonds worth 4 bln USD placed on auction in Japan is negative (-0,149%) demand exceeded supply 5-fold. The negative interest rate indicates that investors are not expecting the end of monetary stimulation from the Central Bank. As a result, the assets continue to swell.

Notably, volume of bonds with a negative interest rate in the world is about 9 trillion dollars. 85% of government bonds yields are below the global inflation limit. The most difficult situation was about pension funds. They must earn 7-8% annual profits in order to fulfill their obligations. However, 0% or negative interest rate bonds increase their deficit balance. According to the US Milliman research company, the average annual yield of pension funds in the US in 2012-2016 amounted to 1.31%. Funds were forced to invest in more risky assets to prevent the downfall. During that period, the share of pension funds' equity investments increased from 19% to 24%.

Another problem is the high volume of bonds on the balance of central banks. The volume of bonds purchased to stimulate the economy at the Fed, ECB and BoJ is currently makes 13.8 trillion. dollars. Financial risks are rising as the bonds are closer to their maturities. The majority of Fed's bonds are expected to expire in 2020-2022. If Fed not continues refinancing, world prices will fall inevitably.