UDPATE 1-Bank of Canada urges new ways to avoid credit woes

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OTTAWA, May 22 (Reuters) - The recent turmoil in global credit markets had eased in recent weeks but policy-makers must not to be complacent and should develop new ways of averting future market meltdowns, Bank of Canada Governor Mark Carney said on Thursday.

In a speech to the New York Association of Business Economics, Carney said central banks should consider a new set of tools for intervening in markets at times of rapid credit growth and overly easy financing, thus helping to avert crises like the credit crunch.

He challenged the conventional view of central banks as mere lenders to market players in times of scarce liquidity. They should be willing to to borrow from the same institutions when there is an overabundance of liquidity, he said.

"Central banks and other authorities should be as concerned about the distortions and inefficiencies created by overly easy financing conditions, rapid credit growth, and excess confidence about future market liquidity as those created by lack of liquidity," he said.

He called for so-called "macro-prudential" regulations that would be co-ordinated across different countries, calling it a "serious concern that warrants closer attention."

Turning to Canadian markets, Carney said bank funding costs had fallen markedly over the last few weeks and were below those of some other currencies. He said the range of collateral being pledged in Bank of Canada auctions showed that liquidity pressures in those specific markets were not intensifying.

Carney was wary of predicting an end to the troubles in world credit markets but borrowed a baseball reference to muse about "whether we are in the seventh, eighth, or ninth inning."

"I will not venture to be that precise, but I would note that baseball games frequently go into extra innings, and in any event, there is always another game and another season."