While low benchmark rates around the world have led to more economic liquidity, they have also been linked to “severe market illiquidity,” Nouriel Roubini, co-founder of financial analysis firm RGE Monitor, said Monday in an op-ed published on The Guardian.
This “paradox,” Roubini explained, has become apparent during several events over the last few years, including the “flash crash” of 2010, an event which saw U.S. stocks plummet nearly 10 percent in 30 minutes, the taper tantrum of 2013 and the almost-instant rise of 10-year German bund yields from 5 basis points to nearly 80 last month.
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