86th Annual Report, 2015/16

26 June 2016

There is an urgent need to rebalance policy in order to shift to a more robust and sustainable global expansion and address accumulated vulnerabilities, the BIS writes in its main economic review of the year. It calls for prudential, fiscal and structural policies to play a greater role.

Annual Report economic chapters: Overview | PDF (130 pages)

Speeches and presentations on the Annual Report by Jaime Caruana, General Manager; Claudio Borio, Head of the Monetary and Economic Department; Hyun Song Shin, Economic Adviser and Head of Research.

Remarks by Claudio Borio and Hyun Song Shin at the media teleconference held on 22 June 2016.

86th Annual Report by chapter

I. When the future becomes today
The global expansion continues. But the economy still conveys a sense of uneven and unfinished adjustment. Expectations have not been met, confidence has not been restored, and huge swings in exchange rates and commodity prices in the past year hint at the need for a fundamental realignment. How far removed are we from a robust and sustainable global expansion? More...
II. Global financial markets: between uneasy calm and turbulence
In 2015 and 2016, financial markets experienced alternating phases of calm and turbulence. As in prior years, prices in core asset markets were keenly sensitive to monetary policy developments. Weaknesses in the main emerging market economies (EMEs), especially China, were again watched closely. Relative to a year earlier, by end-May 2016 equity prices were lower; credit spreads higher; the dollar had depreciated against most currencies; and bond yields were reaching new lows. More...
III. The global economy: realignment under way?
The global economy continued to expand in the year under review, with unemployment generally falling and global growth of GDP per capita around its historical average. That said, sharp falls in commodity prices and their subsequent partial recovery, large exchange rate moves and lower than expected headline global GDP growth shaped perceptions. These developments are often seen as the confluence of unrelated negative shocks. But this triplet is, to an important extent, the result of an economic and financial process that has unfolded over many years. More...
IV. Monetary policy: more accommodation, less room
Monetary policy remained very accommodative over the past year as the room for manoeuvre narrowed. This long-standing exceptional stance was maintained against the backdrop of stubbornly low headline inflation in many economies, uneven global economic momentum and maturing domestic financial cycles in a number of emerging market economies (EMEs) and in some of the advanced economies least affected by the Great Financial Crisis. More...
V. Towards a financial stability-oriented fiscal policy
Since 2008, policymakers have striven to contain the build-up of new financial vulnerabilities and to avoid repeating the mistakes that led to the Great Financial Crisis (GFC). They have tightened prudential regulation and supervision and made increasing use, especially in emerging market economies (EMEs), of macroprudential tools. But are these measures enough? Should not fiscal policy, too, be an essential part of the post-crisis macro-financial stability framework? More...
VI. The financial sector: time to move on
The Basel III framework is nearing completion. In addition to finalising the remaining calibration decisions, consistent and thorough implementation is now key, alongside more rigorous supervision. With regulatory uncertainty receding, banks need to keep adjusting their business models to the new market environment. This includes addressing legacy problems, such as those related to non-performing loans (NPLs). Once financial sector repair is completed, safer and stronger banks will unambiguously contribute to a more resilient economy. More...