The Bank for International Settlements will gather top central bankers and financiers for a meeting in Basel this weekend amid rising concern about a resurgence of the âexcessive risk-takingâ that sparked the financial crisis. In its invitation, the BIS cited concerns that âfinancial firms are returning to the aggressive behaviour that prevailed during the pre-crisis periodâ. The BIS, known as the central banksâ bank, outlined in a restricted note to participants some specific proposals that it believes could create a healthier financial system. Those proposals including lowering return-on-equity targets for the banks as a way to discourage such risk taking. Private sector bank chiefs attending the meeting at the BIS in Basel include Larry Fink of BlackRock, Vikram Pandit of Citigroup, and John Stumpf of Wells Fargo. Lloyd Blankfein, Goldman Sachs chief executive, and Jamie Dimon, chief executive of JPMorgan Chase, were invited but are not planning to attend. The meeting comes at a moment of intense uncertainty, with the global economyâs tentative recovery shadowed by âthe overhang of private-sector debt and rapidly rising public debtâ, and high unemployment. âThe concern here is that the prolonged assurance of very cheap and ample funding may encourage excessive risk-taking,â the BIS invitation note says. âFor example, low financing costs coupled with a steep yield curve may make participants vulnerable to future increases in policy rates â a situation reminiscent of the 1994 bond market turbulence which followed the Federal Reserveâs exit from a prolonged period of low policy rates.â The note also expresses concern about deteriorating public finances and warned that doubt about fiscal prudence âcould seriously disrupt bond markets if it triggered concerns about creditworthiness or inflation because of concerns with government incentives to inflate debt away.â Among the charts included with the note is one indicating the cost of credit insurance against sovereign defaults. In the past, the BIS has invited the top chiefs of private-sector banks to such gatherings in Basel on a yearly basis. But such meetings have been more frequent recently. âThese meetings are an attempt to bring a real world perspective to the deliberations of the wise men of the world,â one Federal Reserve official said. Central bankers âwant to get a sense of what the markets are reacting to.â http://www.ft.com/cms/s/0/310b5c88-fb0d-11de-94d8-00144feab49a.html