The Bank of International Settlements has stated that central banks have used almost all of their tactics to tackle the last crises. Therefore, if the next global financial crisis comes then they will not be able to tackle it.

Bank of International Settlements has assessed the conditions in its annual report. Central banks have repeatedly slashed interest rates in order to save their economies.

Claudio Borio, head of the organization’s monetary and economic department, said, “Persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties”.

Borio thinks that rather than reflecting the current weakness, the banks have added to it through costly financial booms and by delaying adjustment. Owing to which, the situation is a lot of debt, little growth and very less interest rates.

Now, the condition is the interest rates have remained so low for so long that the central banks have nothing to fighter the next crises. The BIS said that policymakers in the euro zone, Denmark, Sweden and Switzerland have reduced their interest rates even below zero and it is contributed to a decline in bond yields.

Decline in bond yields is not good, warned the BIS. Jaime Caruana, general manager of the BIS, was of the view that such low interest rates are not a ‘new equilibrium. In fact, interests rates increase should be welcomed as global economies are now improve. Also, the global economy has been benefitted due to slump in oil prices.