The current ageing and unstable cycle could finish in much the same explosive way, contrary to the widespread belief that it was a once-in-a-century event caused by speculators.

“The end may come to resemble more closely a financial boom gone wrong, just as the latest recession showed, with a vengeance,” said Claudio Borio, the BIS’s chief economist.

The venerable Swiss-based institution says the financial system is about to be tested as the US Federal Reserve steps up the pace of monetary tightening.

A decade of ultra-loose money has kept the lid on debt service costs and masked risk.

"Policy normalisation presents unprecedented challenges," it said in its annual report. It could "trigger or amplify a financial bust in the more vulnerable countries."

Fed rate rises will start to drain the global system of dollar liquidity, setting off a dollar squeeze and driving up borrowing costs across much of the world. "The overarching issue is the global economy's sensitivity to higher interest rates," it said.