Malcolm Knight, general manager of the Bank of International Settlements, speaks during a banking conference in Mumbai Wednesday. - Reuters

Financial contagion from a credit crunch rooted in the American subprime lending market seems not to be affecting emerging economies as much as crises in the past, the head of the Bank for International Settlements said on Wednesday.

Financial markets around the world have been pummeled in recent weeks as the subprime crisis, stemming from United States mortgage defaults, hit investor confidence and prompted central banks to pump funds into their banking systems to tide banks over the credit squeeze.

"This time, I think we are not seeing so much of financial contagion from the developed economies to the emerging economies. So far it seems to be less," BIS general manager Malcolm Knight told reporters at a banking conference in Mumbai, India's financial capital.

Stock markets in Asia saw heavy selling in late July and August as the crisis unfolded.

Banks and hedge funds in countries such as Australia, Japan, Hong Kong and Singapore have reported exposure to the U.S. subprime market through structured products like collateralised debt obligations.

India's central bank has said emerging economies such as its own were at risk of a sudden shift in sentiment that could see foreigners quickly withdraw their investments.

"As long as the fundamental of the global economy is retained it looks like inflows into emerging market economies may be relatively strong," Knight said.

Unlike the Asian financial crisis 10 years ago, the wave of selling has not sent Asian currencies into a tailspin and some stock markets, like India, have recovered most of their falls.

Reuters