The ageing of populations in industrialised countries and the accompanying increase in the size of pension funds increases the possibility of a severe systemic crisis in financial markets, the Paris-based Organisation for Economic Co-operation and Development (OECD) said yesterday.

The think tank said in its November 1998 report on financial market trends that the increase in private pension funds and the increasing globalisation of markets raised the potential intensity and length of speculative financial attacks.

In a section of the report devoted to the implications for financial markets of the ageing of populations, the OECD said that, as populations age, assets in pension funds were likely to increase and this carried "enormous" implications for markets.

"The last implication of global ageing for policy is that scale of and scope for a possible international systemic crisis will become more important as pension funds and other institutional investors continue to diversify into international markets," the OECD said.