On a mild spring day in New York, representatives from Citigroup set out to introduce investors to the bank’s new subprime securitisation platform.

This might sound like a scene plucked from 2007, at the height of the credit bubble that eventually sparked the financial crisis, but Citi’s “roadshow” began only this week. The US bank is prepping the market in advance of a debut securitisation from OneMain Financial, its subprime consumer lending arm.

In doing so, Citi is aiming to tap into a wave of investor demand for higher-yielding securities created from sliced-and-diced loans that it makes to riskier borrowers.

The planned sale is symptomatic of a wider development in credit markets as the thirst for increased returns has led to fears about possible overheating and provoked public soul-searching by central bankers.

Parts of Wall Street’s securitisation machine have shifted into higher gear, while sales of junk-rated bonds have surged and lending to highly-leveraged companies has surpassed its pre-2008 level.

“We are beginning to see the build-up of speculative excess. It’s more advanced in the US, and starting to come through in Europe,” says Chris Watling, chief market strategist at Longview Economics.

Central bankers have been debating whether monetary policy should take into account asset bubbles ever since the low interest rates cultivated under Alan Greenspan were blamed for herding investors into riskier investments in the years preceding 2008.

However, in recent months, that debate has become increasingly public as credit markets continue their upward trajectory.

While many members of the Federal Reserve Board argue that the central bank should not risk derailing longer-term economic growth in order to respond to potential market excesses, some have argued the reverse.

Daniel Tarullo, Fed board governor and its top banking regulator, said in February that the central bank should reserve the option of using monetary policy to fight latent bubbles.

Jeremy Stein, Mr Tarullo’s colleague on the board, argued late last month that the central bank should incorporate financial stability risks into its monetary policy. He added that the Fed should consider raising interest rates when estimates of so-called risk premiums in the bond market are abnormally low.

Just days before Mr Stein’s speech, one such risk premium measurement had dropped to its lowest level since early 2007. The difference, or “spread,” between Bank of America Merrill Lynch’s index of high-yield bonds and 10-year US Treasuries, fell to 291 basis points – not far from the 288 bps recorded in 2007.

“Here is where one can get into hard-to-resolve debates about bubble spotting and about whether one can expect the Federal Reserve to be smarter than other market participants,” Mr Stein said in the speech.

For bankers, the idea of a central bank using its authority to deflate market bubbles is more than theoretical. They argue that leveraged lending guidance issued last year by regulators including the Fed, is as much about reining-in overly buoyant markets as it is about ensuring that banks do not make loans that are too risky.

“They’re trying to make sure whatever banks hold in leveraged loans is safe,” says one banker at a major lender. “But clearly the second major reason is to curb the market because they’d like to take the wind out of a perceived credit bubble.”

According to market participants, the guidance has yet to have a significant impact.

Banks sold $161.8bn worth of leveraged loans in the first quarter of 2014, according to S&P Capital IQ data. That is below the $189bn sold last year in the same period, but still ranks as one of the highest quarterly levels ever recorded.

“It’s affecting [individual bank] behaviour but I’m not sure it’s affecting the market,” says the banker. “If there’s a significant supply-demand imbalance for a product of any type, it will find its way from the guys who have it to the guys who want it – it’s just going to move to unregulated areas.”

A paper prepared for the 2014 US Monetary Policy Forum argued that financial stability risks could arise even outside of the big banks, prompting further discourse over how regulators should be approaching financial stability.

The paper’s message was later echoed by Mr Stein who warned that “the rapid growth of fixed-income funds – as well as other, similar vehicles – bears careful watching.”

According to the paper’s figures, based on Morningstar data, investors worldwide have poured almost $2tn into fixed income funds between the start of 2008 and April 2013, eclipsing the less than $500bn placed into stocks.

“An under-appreciated factor in discussions about owning sectors of the fixed income market is the that of liquidity,” says Michael Fredericks, portfolio manager at BlackRock, meaning that investors may find it difficult to exit their positions should rising interest rates spark a sell-off in credit.

For some analysts, far removed from the responsibility of selling bundles of subprime loans, the question is simply when credit markets will turn – not if.

“It increasingly feels like the credit cycle is on borrowed time,” Hans Lorenzen, credit strategist at Citigroup, said in a note this week.

Attention: Central Bankers Are Terrified Of 2007-2009 Repeat