The Bank for International Settlements warned on Monday about"overstretched valuations" on financial markets, saying that promising news on vaccines was eclipsing the uncertain economic outlook.
"While markets have moved in the right direction in response to news about the vaccine, they are above or close to the levels that prevailed before the pandemic, when questions about overstretched valuations were already present," said Claudio Borio, head of the BIS monetary and economic department. Established in Basel, Switzerland in 1930, the BIS is owned by 62 central banks, representing countries that account for about 95% of global gross domestic product.
Looking ahead, a rise in bankruptcies can be expected, said Borio. Banks, unlike the markets, are already beginning to become more cautious in their risk assessment strategy, he added.