"The BIS said in its quarterly report that the markets are “under the spell of monetary easing”, convinced that central banks will keep the asset boom going despite signs of “broad deceleration” in the US economy and fatigue in China.

Jaime Caruana, the BIS’s managing director, said last month that the authorities should refrain from further stimulus to keep growth alive, warning that excessive liquidity is distorting the financial system without achieving much. “If a medicine does not work as expected, it’s not necessarily because the dosage was too low,” he said.
Morgan Stanley said emerging markets face a “mini sudden-stop” as bond flows dry up. The retreat is driven by fears that the Fed will soon taper its bond purchases, draining dollar-based liquidity.

The BIS figures show that British banks are heavily exposed to the developing world, with $919bn of loans, more than the Americans ($794bn), French ($473bn) or Germans ($307bn).