Noyer and Draghi, Consider Wyplosz

Italy's central bank governor Mario Draghi shakes hands with French central bank governor Christian Noyer, with French finance minister Francois Baroin Photograph by Remy de la Mauviniere/AP Photo

Still, it is not clear today—in a world of abundant liquidity, low interest rates and historically low spreads—that markets are correctly evaluating the risks linked to the explosion in derivatives and leveraged operations over the last five years, Noyer cautioned. The risk of default somewhere in the chain of borrowers is “always possible” especially if the cost of liquidity rises.

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