The European Central Bank said it fears that greed could reverse economic recovery in the eurozone, throwing it back into crisis.
The ECB said that investors seeking higher profits in a time of low interest rates are the biggest threat to financial stability.
It warned that the demand for high financial returns is creating a growing risk of a “sharp and disorderly unwinding” of the fragile economic progress.
Monetary policies which are not tight enough have distorted markets, it said, pointing out that the race after higher profits could result in price bubbles.
The ECB was not alone in its thinking. A deputy governor at the Bank of England, Charlie Bean, recently said that ultra-loose policies had increased investors’ “search for yield”, which can create bubbles.
While Mr Bean said the banks were now in a much better position to cope, the current financial markets were “eerily reminiscent” of the run-up to the financial crisis.
In its financial stability report, the ECB also expressed its concern that record high government debts throughout all 18 eurozone members could become unmanageable if recovery stalls.
