ECB warns of Asia risks rising as Fed liftoff tests stability

Frankfurt

THE European Central Bank (ECB) warned of a rapid repricing of global risk premium, focused on emerging markets, especially if the US Federal Reserve increases interest rates faster than expected.

"Highly indebted foreign-currency borrowers may be vulnerable to a prospective normalisation of financial conditions in the US and other advanced economies," the ECB said in its twice-yearly Financial Stability Review published on Wednesday. "A faster than expected withdrawal of monetary-policy accommodation in other major advanced economies could trigger a reversal of global term premia, which may also spill over to the euro area."