World governments, including Australia, have been urged by the globe's peak banking authority to stop relying on cheap money to boost their economies, with a warning about the build-up of major financial threats from low interest rates.

Before the Reserve Bank of Australia's July board meeting on Tuesday, at which markets believe there is a 70 per cent chance official interest rates will be sliced to a record low of 1 per cent, the Bank for International Settlements has issued a global warning that easy monetary policy may not be able to deal with a slowdown in the economy.

The BIS - effectively the central bank to the world's central banks such as the RBA - used its annual overview of the global economy to say politicians had to start making difficult but necessary structural reforms to avoid the dangers created by easy money.

The central bank to the world's central bank has warned of the dangers of "easy money", saying politicians have to start implementing structural reforms. Credit:AFR

BIS general manager Agustin Carstens said central banks had been forced to do too much heavy lifting since the advent of the global financial crisis, as politicians shied away from pursuing economic reforms.