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Bank of England (BoE) Deputy Governor Minouche Shafik said on Tuesday that the normalisation process of the monetary policy may pose a risk to financial stability.
"Order-flow imbalances could preface a prolonged period of volatility, a severe reduction in market liquidity, and ultimately a loss of confidence in the ability of markets to contribute to sustainable growth. In short, there is a risk to financial stability," she said.
Shafik added that the improvement of the transparency could help to address this risk.
"Monetary policy makers in the US and UK will likely consider it appropriate to gradually tighten monetary policy should the recovery in their respective economies continue," BoE deputy governor said.
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