The Bank for International Settlements issued a press release on its 84th Annual Report in which it calls for new monetary policy. "A new policy compass is needed to help the global economy step out of the shadow of the Great Financial Crisis," writes the Bank for International Settlements in its latest Report . In its main economic review for the year, the BIS calls for "adjustments to the current policy mix and to policy frameworks with the aim of restoring sustainable and balanced economic growth." The report states: "Despite an aggressive and broad-based search for yield, with volatility and credit spreads sinking towards historical lows, and unusually accommodative monetary conditions, investment remains weak <b:>`_.... The only source of lasting prosperity is a stronger supply side. It is essential to move away from debt as the main engine of growth." On money markets, it comments briefly on page 83: "At one extreme, a reversion of money market rates to historical averages would push debt service burdens to levels close to the historical maxima seen on the eve of the crisis. But debt service burdens would also grow at the other extreme, if interest rates remained at the current low levels." On page 115, it adds: "Similarly, a hidden form of leverage relates to the implicit reassurances of capital preservation made by money market funds. The AMC (asset management company) responsible for those funds might feel compelled to cover shortfalls due to bad portfolio performance. Explicit or implicit backing of a segregated fund's borrowing by the umbrella organization managing the fund may also put the AMC balance sheet at risk." The BIS adds: "In crisis-hit countries, there is a need to put more emphasis on balance sheet repair and structural reforms and relatively less on monetary and fiscal stimulus. In no small measure, the report says the causes of the post-crisis malaise are those of the crisis itself -- they lie in a collective failure to get to grips with the financial cycle."

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