Low interest rate threatens recovery

China's top bank regulator said yesterday the weakening US dollar and low interest rates are spurring speculation in stocks and real estate, distorting global asset prices and threatening the global economic recovery.

The situation poses an "insurmountable risk to the recovery of the world economy," said Liu Mingkang, chairman of the China Banking Regulatory Commission. Liu said the declining US dollar and reassurances by officials that interest rates will remain low were encouraging a "massive" US dollar carry trade - the practice of borrowing money at low rates in one currency to invest in assets in another currency that offer a higher return.

Source:China Daily/AP