When interest rates decline and stabilise, financial-market participants tend to take on greater leverage and risk. The challenge for regulators, then, is to prevent those risks from becoming systemic and causing a broader economic crisis.

Capital markets believe that interest rates are indeed on a downward path for three reasons. First, inflation is moderating in the United States, the United Kingdom, and Europe, and there is even evidence of deflation in China. Second, global economic growth is projected to remain low over the next decade with growth in advanced economies over the next f...