BASEL, Switzerland -(Dow Jones)- Financial conditions have strengthened in recent months as the economic recovery takes hold, but financial market participants may be overrating the degree of improvements, Financial Stability Board Chairman Mario Draghi said Saturday.
"The general situation is much better than we could have expected a year ago, but at the same time, it is not as good as the market thinks it is," Draghi said at a press briefing.
The FSB, based at the Bank for International Settlements in Basel, includes central bank experts and regulators from around the world.
Following the collapse of major financial institutions in 2008 and a fast drying up of liquidity available to banks globally, the leaders of the world's 20 most important economies have charged the FSB to monitor progress in strengthening financial regulation.
With markets' confidence and risk appetite recovering fast, there is now a growing concern that lenders and investors may quickly return to their old habits and engage in excessive risk-taking.
The FSB's biannual plenary meeting Saturday comes ahead of regular gatherings of global central bankers and financiers at the Bank for International Settlements in Basel later this weekend and Monday.
Copyright 2009 Dow Jones Newswires
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