Gearing up for ever higher leverage

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Central banks and regulators are looking at the global credit markets and they do not like what they see. Spreads are unintelligibly low, there are high and opaque levels of leverage, and the unstoppable growth in derivatives and structured credit has distorted perceptions of risk and an understanding of where it now lies.

"There is now such creativity of new and sophisticated financial instruments ... that we don't know fully where the risks are located," said president of the European Centr

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