CGFS - Activities

The Committee on the Global Financial System (CGFS) monitors financial sector developments and analyses their implications for financial stability and central bank policy. The CGFS reports to the Governors of the BIS Global Economy Meeting. It is chaired by Chang Yong Rhee, Governor of the Bank of Korea, and comprises senior officials from 27 central banks plus the BIS.

Highlights 2024/25

Global financial developments

The new phase of monetary policy cycles and – more recently – the growing geopolitical uncertainties shaped the discussions at the CGFS. Cross-border channels for the transmission of fifinancial conditions, coupled with the pivotal role of the US dollar, underpinned important messages for monetary policy in advanced economies (AEs) and emerging market economies (EMEs) alike. In addition, the CGFS paid particular attention to signs of stretched asset valuations. Members also discussed vulnerabilities in the non-bank financial sector, stemming for instance from recent changes to the business model of insurance companies.

Fiscal policy - implications for central banks

The CGFS exchanged views on channels through which actions by fiscal authorities affect financial stability or create challenges for the transmission of monetary policy. Such challenges are particularly strong when public finances are already strained. In this context, CGFS members also discussed how unfolding fiscal plans around the globe – coupled with quantitative tightening in many AEs and limits to the absorption capacity of financial intermediaries – shaped developments in sovereign bond markets.

Interest rate risk

Exposure to interest rate risk directly affects the transmission of monetary policy to aggregate demand and influences borrowers' creditworthiness. A CGFS report published in November analysed implications of such exposures in the household and non-financial corporate sectors of 23 AEs and 26 EMEs.

Foreign currency funding risk

Liquidity shortages at financial intermediaries are a key driver of stress, especially when they involve a foreign currency. To improve the measurement of foreign-currency funding risk, CGFS members agreed to enhance the BIS statistics on over-the-counter foreign exchange derivatives. In addition, the CGFS has launched a study of the geographic distribution of exposures to foreign-currency funding risk as well as a stocktake of the existing arrangements for alleviating attendant shortages.

Technological innovation

The CGFS took a financial stability perspective on technological innovation. Members discussed trade-offs between efficiency gains on the one hand and challenges for monetary policy and supervision on the other. A joint CGFS-CPMI workshop focused on recent advances in payment systems – notably, their implications for the management of liquidity needs in domestic, cross-border and cross-currency contexts.