Governments, banks and households struggling with too much debt are dragging down the world's economy and more needs to be done to make the banking system safer, a global organization of central banks warned Sunday.
The Bank for International Settlements said in its annual report that the world economy remains out of balance, with advanced economies struggling with debt and emerging economies growing strongly but facing risks.
The BIS -- an intergovernmental organization of central banks based in Basel, Switzerland -- said it's key for governments to make banks take responsibility for their losses and force them to rebuild their finances. Meanwhile, the threat from risky bank behavior is growing again.
"The world is now five years on from the outbreak of the financial crisis, yet the global economy is still unbalanced and seemingly becoming more so," the BIS said in its 82nd annual report.
The financial crisis that began in 2007 with losses suffered by investment funds and banks on mortgage-backed securities in the United States led to a full-blown crisis and global recession after U.S. investment bank Lehman Brothers went bankrupt in 2008.
The aftermath, says the BIS, is that governments, banks and consumers are all trying to cut back on debt at the same time, magnifying each other's problem as they do so.-- AP