Unwinding QE could trigger financial crisis, warns JP Morgan

JP Morgan has warned that another financial crash could be round the corner as the decade of ultra-loose money comes to an end.

Central banks have purchased roughly $15 trillion (£11.3 trillion) of financial assets since the crisis, but the Wall Street bank’s head of quantitative and derivatives strategy Marko Kolanovic said this will start to unwind next year in a move that could “potentially cause a financial crisis”.

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Dubbing the hypothetical crash the “great liquidity crisis”, he said that outflows – or lack of new inflows – from undoing stimulus could lead to “asset declines and liquidity disruptions” that in turn trigger a crash.

Unwinding QE could trigger financial crisis, warns JP Morgan