Investors and lenders in emerging markets may be underestimating the risks, Bill Rhodes, vice-chairman of the Institute of International Finance, said on Tuesday.

Mr Rhodes, a senior Citigroup banker who was involved closely with Latin America’s external debt restructurings of the 1980s and 1990s, said that economies in Latin America had become much sounder in recent years but recent steep rises in local financial markets owed much to the abundance of capital inflows.