It is difficult to see a smooth exit out of quantitative easing in the world's largest economy, the U.S. or Japan, said Charles Dallara, former managing director of Washington-based bank lobby group, the Institute of International Finance.
"We're expecting too much of the Federal Reserve, and Bank of Japan, and I'm growing increasingly concerned that we're not going to find an easy and smooth exit out of QE in the U.S. or for that matter in Japan," Dallara, who played a central role in the European debt crisis by representing private sector bondholders in Greece debt restructuring negotiations, told CNBC Asia's "Squawk Box" on Monday.
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U.S. stock and bond markets were mired by volatility last week on concerns the country's central bank may taper its bond purchase program later this year if data show the economy is on a sustainable growth path.
Dallara, who is currently chairman of the Americas at investment management firm Partners Group, added, "I was certainly a strong supporter of this [quantitative easing] in 2009, 2010 and 2011. But have we continued too long? Are we sowing the seeds for a sharp correction not just in bond markets but in stock markets?"
U.S. stocks have risen around 16 percent since the start of the year, bolstered by easy liquidity conditions globally.
On Japan, Dallara said he fears the country's central bank is "rolling the dice" with its bold monetary action. In April, the Bank of Japan announced plans to double the supply of money within two years to achieve a 2 percent inflation target.
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"I understand that the circumstances in Japan called for bold action but when I saw the actions they are taking, I couldn't help but that feel in some ways this was rolling the dice with the future risk of inflation," he said.
Inflation has yet to show up in the world's third largest economy with consumer prices falling for a fifth straight month in March.
Dallara was also critical of the European Central Bank's efforts to support growth in the single currency bloc, noting that it hasn't acted with enough "energy and forward momentum" to support the recovery.
"The European economy remains in deep trouble in fact I think it's in deeper structural difficulty than many realize. I was in Beijing for the last few days and I was slightly surprised at the somewhat optimistic outlook for outlook for Europe that I found by many officials and private sector leaders there," he said.