According to him, the global economy is unable to recover to pre-crisis levels in the foreseeable future.
"It is likely that the world will face another global financial crisis in the next five years. The reason lies in the fact that many of the problems behind the 2008 crisis remain unsolved. The fragility is still there, for instance in shadowing banking, high indebtedness, a lack of structural reform, the sustainability of emerging markets, and high leverage," Liao said.
He pointed out that the reforms central banks adopted in response to the 2008 crisis were not enough to restore the global economy. The super low-rate environment also delayed structural reforms, and market discipline was breached.
"Therefore, the next crisis will probably catch us unprepared once more," Liao said.
He also called for the tightening of international regulatory norms for financial institutions such as shadow banking, which could be a real threat to the global economy.
In September, a team of Goldman Sachs analysts published a report saying that the global financial crisis has entered its third phase. This stage is characterized by extremely low commodities prices, the economic downturn in China and other emerging economies, and low global inflation.
According to Goldman Sachs, the crisis started seven years ago with the collapse in US real estate and banking, and it will not be over until all the excess lending in emerging markets is worked through.
