Former U.S. Treasury Secretary Larry Summers said Tuesday that current global conditions that contributed to Monday's selloff represent the type of moment when surprises such as the Asian financial crisis or subprime mortgage bust can occur.
"I'm not prepared to predict that we're in the midst of a crisis," he told CNBC's "Squawk Box." "But certainly the risks feel greater now than they have at moments in the past and I think the orientation of policy, which had been toward resisting overconfidence, now has to again shift toward providing confidence."
Summers said he sees potential for "significant instability" and "substantial risks" associated with current conditions.
In particular, the increase in volatility to historic levels in the last week after a period of "substantial market tranquility" is cause for concern, he said.
The slowdown in China, its impact on the global economy and commodities markets, general distress in emerging markets, and a disappointing rate of demand growth in industrialized countries have combined to create substantial risk, he explained.