Bank of Canada Governor Tiff Macklem has issued a stark warning that global capital flows are developing dangerous imbalances, drawing parallels to the distortions seen before previous economic downturns.
Macklem highlighted how the United States continues to attract a disproportionate share of global investment, creating pressure on other economies to compete for limited liquidity.
The governor’s comments underscore growing concern among central bankers that the current regime of US capital dominance is not sustainable without significant spillover effects.
As the US economy remains a magnet for global savings, other jurisdictions face the dual challenge of maintaining growth while managing tighter financial conditions.
This dynamic can lead to sudden stops in capital flows, currency volatility, and reduced investment in peripheral markets.
Macklem’s intervention adds to a chorus of caution from global financial leaders.