WASHINGTON - While the raging sovereign debt crisis in the eurozone poses a major risk to the global economy, it is not the only source of concern, with growing signs of stuttering growth in many parts of the world, San Francisco Federal Reserve President John Williams said Monday.

In welcoming remarks to open the bank's conference on Asia Banking and Finance, Williams did not comment on current monetary policy or provide an economic outlook. He is a voter on the Fed's steering group, the Federal Open Market Committee, this year.

His comments focused mainly on the state of global finance, and Williams noted that while stronger than it was three years ago, the system still remains vulnerable.

"The European sovereign debt crisis threatens banks in that continent, and, by extension, elsewhere. Clearly, it represents a significant threat to financial stability," he said. 

"In the worst case, the European crisis could undermine the financial improvements in North America and Asia," Williams added.

But the turmoil across the Atlantic is not the only risk, he continued, warning that "economic trends in many parts of the world appear to be deteriorating."

Growth in the United States remains moderate, Williams said, while Europe looks to be in recession.

As for China, the primary driver of recent global economic activity, "recent indicators point to a marked deceleration in growth," he said.

And despite the passage of regulation to make the global financial system stronger and more resilient, Williams still has some concerns.

"Many large global financial institutions remain highly leveraged and rely on volatile wholesale funding. Others are still working through troubled loan portfolios," he said.

He cautioned that efforts by regulators to close loopholes exposed by the 2008 crisis remain a work in progress, "and will take years to complete."

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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