Eight years ago, Claudio Borio, a senior economist at the Bank for International Settlements, co-authored a paper which warned that the world’s financial system was spinning out of control, due to excess in the complex credit world. At the time, the paper was largely ignored, if not derided by many senior policymakers. But now it looks prescient; so much so, in fact, that Borio and his co-author, Bill White (who also used to work at the BIS), are some of the few economists who have emerged from the recent financial crisis with their reputations intact.

Given this, investors might do well to look at another paper that Borio has just produced. This looks not at securitisation – or issues such as collateralised debt obligations – but at the loftier question of central banks. While it remains to be seen whether this work is equally prescient, the conclusions are sobering.

He argues that the world’s central banks are currently labouring with an almost impossible task: although the expectations of investors and politicians of these institutions are rising apace, central bankers themselves are at sea in this post-2007 land. Or, to use his metaphor, they are struggling to find any workable “compass” in these new, stormy waters.