NY Fed banker warns against rapid credit growth

BUENOS AIRES, Argentina (AP) -- A top banker at the New York Federal Reserve says emerging economies will continue to grow faster than their first-world counterparts -- but must not let lending mushroom too quickly.

The New York Fed's executive vice president Terrence Checki says emerging economies accounted for three-fourths of global growth since 2003, and will expand even more in coming years if they slash their reliance on export-led growth.

He warned a forum of economists and bankers in Buenos Aires Tuesday that growth based on the rapid extension of credit could put developing economies at risk.

Checki says the U.S. credit crisis "revealed fundamental shortcomings in the prevailing credit arrangement," which he says must be overhauled.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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