By Serkan Arslanalp, Barry Eichengreen and Chima Simpson-Bell The US dollar has long played an outsized role in global markets. It continues to do so even as the American economy has been producing a shrinking share of global output over the last two decades. But although the currency’s presence in global trade, international debt, and non-bank borrowing still[…]
Key Takeaways: Basel Committee finalises principles for effective management and supervision of climate-related financial risks. Progresses work on specifying cryptoasset prudential treatment and issuing a second consultation paper. Finalises review of the treatment of cross-border exposures within the European Banking Union on the G-SIB methodology. Link: Basel Committee finalises principles on climate-related financial risks, progresses[…]
By Markus Behn, Jan Hannes Lang and Eugen Tereanu One important lesson learned from the use of capital-based macroprudential policies in recent years is that tightening such policies during boom phases is unlikely to have a notable impact on credit supply and the build-up of imbalances, while the accumulated resilience and the release of buffers[…]
By Levent Altinoglu and Joseph Stiglitz The interconnected structure of the financial system has been a focal point of debate among policymakers in the wake of recent financial crises. This column offers a theory to help explain the structure of the financial system and its consequences for risk-taking and systemic risk. The authors find that interconnectedness[…]
By Iñaki Aldasoro, John Caparusso, and Yingyuan Chen Global banks establish their international presence through host-country networks of subsidiaries and branches. These entities’ roles and behaviour are illuminated by their balance sheet positions, but these have not been systematically captured across countries. This brief introduces an attempt to redress that gap with initial findings from[…]
By Anneke Kosse and Ilaria Mattei Most central banks are exploring central bank digital currencies (CBDCs), and more than a quarter of them are now developing or running concrete pilots. This BIS paper updates earlier surveys that asked central banks about their engagement in this area. The latest responses from 81 central banks show that[…]
By Financial Stability Board (FSB) The growth in external USD financing from non-bank financial institutions following the 2008 global financial crisis has created new financial stability challenges for emerging market economies. Link: US Dollar Funding and Emerging Market Economy Vulnerabilities
By Mairead McGuinness Cryptocurrency is going mainstream. Just think back to the Super Bowl ads. More and more investors – including many young people – are dabbling in the crypto marketplace, lured in by social media, promises of high returns and the prospect of building a new, open and innovative financial system. But investments in volatile digital[…]
By Maurizio Trapanese The non-bank financial intermediation (NBFI) sector has grown considerably over the past decade to represent almost half of global financial assets, compared with 42% in 2008.1 It plays a key role in the financing of the real economy and in the management of the global financial assets. This expansion has mainly been[…]
By Iñaki Aldasoro, Sebastian Doerr, Haonan Zhou In this box, we investigate the flight home effect (FHE) among non-banks. The FHE refers to the finding in Giannetti and Laeven (2012) that, during financial crises in their home country, lead arranger banks cut lending to foreign borrowers by more than they did to domestic borrowers. Giannetti[…]