The prolonged period of low central bank interest rates and rising debt in developed economies poses the greatest risk to financial markets in the medium-term, according to an International Monetary Fund (IMF) executive.
David Lipton, the IMF's first deputy managing director, told CNBC why the enduring trend of quantitative easing, implemented after the 2008 financial crisis to increase liquidity and encourage borrowing, now presents potentially harmful downsides.
"In financial markets, there are risks that come from having low interest rates for a very long time," he said. "That's affecting risk-taking behavior, it's affecting the market risk that capital markets participants have."
He also pointed to ever-mounting debt in both developed and emerging economies. "We are seeing some greater leverage in the corporate world, in some countries for households, so that rising indebtedness and that increase in market risk really is something that policymakers should keep an eye on."
According to the Bank for International Settlements, global corporate and household debt reached 138 percent as a share of gross domestic product (GDP) in 2016, compared to 115 percent in 2007, before the start of the economic downturn. The 2016 figure for advanced economies alone was 195 percent.
"We think monetary policy has to continue to be supportive, and it's important to find other ways through macro-prudential policies to make sure that the financial market risks are kept under control," Lipton said. "But it's also important to put in place policies that will support growth in the long run, because a stronger growth impulse over the long term is going to help modulate financial sector risk as well."
The IMF's current macroeconomic picture, meanwhile, is one of global recovery, in a process Lipton described as "lifting all boats together" and driven by policy support and recovery in commodity prices.
"Our view is that in the longer term there's a need to boost growth because trend growth has been somewhat more sluggish. So despite the improved recovery, our message is that countries should take advantage of the opportunity of being in recovery to try and prepare for stronger growth ahead."