Stern challenges must be addressed," Agustin Carstens, BIS general manager, said in the organisation's annual report published on Sunday. It is the first time that, across much of the world, a surge in inflation has co-existed with widespread financial vulnerabilities. The longer inflation remains elevated, the stronger and prolonged the required policy tightening, the BIS report said, warning that the possibility of further problems in the banking sector was now "material". "Very high debt levels, a remarkable global inflation surge, and the strong pandemic-era increase in house prices check all these boxes," the BIS said. Commenting further on the economic picture, Carstens, former head of Mexico's central bank, said the emphasis was now on policymakers to act.

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Persons: Stern, Agustin Carstens, Claudio Borio, Borio, Marc Jones, Emelia Sihtole Organizations: BIS, LONDON, Bank for International Settlements, Reuters, Reuters Graphics Reuters, Silicon Valley Bank, Credit Suisse, Bank of America, U.S . Federal Reserve, European Central Bank, Thomson Locations: Britain, Norway, Silicon