£3tn handed to world economy by central banks

26 April 2011

Around £3 trillion has been handed to the global financial system by the world's central banks, a new report has revealed.

Carried out by Fathom Consulting, the research showed that around eight per cent of the world's economy has been ploughed by the institutions, the Daily Telegraph reports.

However, the company noted the findings are likely to increase concerns that this pumping of liquidity is responsible for rising stock markets.

Economists at Fathom said they are worried that last year may have represented the highest point of economic recovery.

They noted: "It remains unclear how much of the equity market rally has been 'genuine', rather than simply a 'mopping up' of that extraordinary injection of liquidity."

Further gains in equity markets could become more difficult to achieve as this stimulus is withdrawn, the experts added.

US president Barack Obama recently claimed his country's finances are unsustainable, noting both leading political parties need to cooperate to solve the problem.

By Claire Archer

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