IslamicFinance.de

Central banks in developed economies have created an environment of ultra-low interest rates to rekindle economic growth and to battle falling inflation. They’re doing this by keeping policy rates close to zero and “printing money” on an unprecedented scale via a veritable alphabet soup of programs, such as QE, CE, LTRO and TLTRO. These low interest rates have put a lot of pressure on investors, such as pension funds, to generate a decent return, setting off a massive search-for-yield frenzy. As a result, foreign investors current allocate more than $4 trillion to emerging and developing economies. Cheap foreign money can be highly addictive. It produces a pleasant growth buzz at first.