BIS Quarterly Review, March 2016

6 March 2016

The BIS Quarterly Review for March 2016: Uneasy calm gives way to turbulence

Remarks by Mr Claudio Borio, Head of the Monetary and Economic Department, and Mr Hyun Song Shin, Economic Adviser & Head of Research, at the media briefing on 4 March 2016.

International banking and financial market developments

Uneasy calm gives way to turbulence
The Federal Reserve's interest rate lift-off in December did little to disturb the uneasy calm that had reigned in financial markets in late 2015. But the new year had a turbulent start, featuring one of the worst stock market sell-offs since the financial crisis of 2008. At first, markets focused on slowing growth in China and vulnerabilities in emerging market economies (EMEs) more broadly. Increased anxiety about global growth drove the price of oil and EME exchange rates sharply lower and ... More...
Highlights of global financing flows
International financing, as measured by the BIS global liquidity indicators (GLIs), slowed in the second half of 2015. Aggregate international bank credit in the third quarter declined compared with a year earlier. The stock of international debt securities grew in the year to December 2015, but at a slower pace than in recent years. US dollar credit to non-bank borrowers outside the United States stood at $9.8 trillion in September 2015, essentially unchanged from the previous reading in June. Dollar borrowing by non-banks in emerging market economies (EMEs) stood at ... More...

Special features

How have central banks implemented negative policy rates?
Since mid-2014, four central banks in Europe have moved their policy rates into negative territory. These unconventional moves were by and large implemented within existing operational frameworks. Yet the modalities of implementation have important implications for the costs of holding central bank reserves. The experience so far suggests that modestly negative policy rates transmit through to ... More...
Wealth inequality and monetary policy
This feature explores the recent evolution of household wealth inequality in advanced economies by looking at valuation effects on household assets and liabilities. Using household survey data, we analyse the possible drivers of wealth inequality and the potential effect of monetary policy through its impact on interest rates and asset prices. Our simulation suggests that wealth inequality has risen since ... More...
The resilience of banks' international operations
This feature explores the resilience of banks' balance sheets after the 2008-09 financial crisis through the lens of a unique global data set crossing bank nationality and host country. We start by documenting post-crisis changes in the structure of BIS reporting banks' global operations across bank nationalities. We then zero in on the funding mix of banks' foreign affiliates (branches and subsidiaries) on the eve of the crisis, and how it ... More...
Hanging up the phone - electronic trading in fixed income markets and its implications
This article explores drivers and implications of the rising use of electronic and automated trading in fixed income markets - a process we refer to as "electronification". We take stock of the current state of electronic trading and how it has changed the market ecosystem, its resilience and its overall functioning. We argue that the impact of electronic and automated trading is ... More...

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