IMF Deputy: This 'scares everyone'

Volatile market conditions could get worse, a senior official from the International Monetary Fund warned.

As oil plunged below $27 a barrel and equity markets sold off in panic, Zhu Min, the IMF's deputy director, said markets are becoming more fragile.

Market liquidity is the main concern. Prices move faster and further when investors make the same decisions at the same time.

"The key issue is that liquidity could drop dramatically, and that scares everyone," Min told a panel at the World Economic Forum in Davos, according to a report from Ambrose Evans-Pritchard in the Telegraph.

It's a consequence of herd behaviour and a reaction to the US Federal Reserve unwinding its near-zero interest rate policy. As the Fed begins to raise rates, so all global investors change their behaviour at the same time, in the same way, increasing the likelihood of big price moves and market volatility.