Fasten your seat belts, folks - more turbulence ahead in financial markets

A VERY simple but absolutely key question was posed on Wednesday by a senior IMF official in commenting on the extreme turbulence rocking financial markets at present. "Who really is in charge?" asked financial counsellor Jose Vinals during a very timely policy analysis he delivered in London as markets continued to shake.

Who indeed? Clearly, it is not the International Monetary Fund itself - which is limited to doing only what its member governments mandate it to do, while national finance ministries and central banks follow their own courses without much apparent regard to the need for global coordination. This, as Mr Vinals (who is head of the Washington institution's Monetary and Capital Markets Department) implied, is part of the problem as "normalisation" of monetary policy among the major economic powers of the world continues on its alarmingly wobbly way.

The US Federal Reserve has begun tightening (a move it could yet be forced to reverse if the current turmoil deepens) while the European Central Bank (ECB) continues to ease, and the Bank of Japan (BOJ) takes what may prove to be ill-advised actions with negative interest rates. The lack of coordination has sent global capital flows into a state of shocked reaction, hitting emerging markets especially, while stock and bond markets are showing signs of panic as investors search in vain for a compass and an anchor. "We need a greater focus on system-wide financial stability," declared Mr Vinals at the London conference of financial specialists.