Recent interest rate hikes by emerging economies could lead to a bursting of global financial asset bubbles, according to a senior official with China’s banking regulator.

Unprecedented pandemic easing measures by developed countries have enlarged such bubbles, Liang Tao, vice chairman of China Banking and Insurance Regulatory Commission, said at the International Finance Forum in Beijing on Saturday. Developed countries are sticking with ultra-low rates even as emerging economies raised their borrowing costs, potentially resulting in the re-pricing of global assets, he said.

Countries need to coordinate financial regulation and improve the monitoring of cross-border fund flows, and emerging markets must prevent risks from large movements of the so-called hot money, Liang said.

The official also said China has managed risks from new hidden local government debt, and contained bubble risks in property finance. The financial sector’s leverage has declined, while a disorderly expansion of capital has been corrected, he said.

The global economic governance system including organizations such as the International Monetary Fund, the World Bank and the World Trade Organization should better represent developing countries, Liang said.

— With assistance by John Liu, Yujing Liu, and Qizi Sun