Key bank warns against `uneasy calm` in global markets

The Bank for International Settlements (BIS) issued a warning Sunday over an "uneasy calm" within financial markets, noting that the global economy remains vulnerable to serious disruptions.

The BIS -- known as the central bank of central banks -- made the call in its quarterly report which is closely watched by investors.

In August and September, markets were shaken after serious concerns emerged about the health of leading emerging economies, especially China.

Interventions from monetary authorities succeeded in stabilising markets to a degree, but the head of the monetary and economic division at the BIS, Claudio Borio, cautioned against being lulled into a false sense of security.

"The present calm is fragile," Borio said.

He pointed specifically to slowing capital flows and persistent signs of trouble in Brazil and Russia, even if China appears to have stabilised in part.

"In this context, it`s hard to see the current calm as anything other than uneasy," Borio said.

Emphasising the uncertainty that continues to affect financial markets, Borio noted that investors still remain extremely sensitive to even the slightest surprise in actions from central bankers.

A case in point is the reaction this week to European Central Bank chief Mario Draghi`s latest stimulus package, which sparked a broad sell-off from disappointed investors who said the measures did not go far enough.

Senior ECB officials blamed the disappointment on investors who they say misjudged the ECB`s expected actions.