Credit, commodities and currencies

Lecture by Mr Jaime Caruana, General Manager of the BIS, at the London School of Economics and Political Science, London, 5 February 2016.

The global economy finds itself at the centre of three major economic developments: disappointing economic growth, especially in emerging economies; large shifts in exchange rates; and a sharp fall in commodity prices. These should not be seen as one-off shocks or headwinds but manifestations of a major realignment of economic and financial forces.

This emphasises the need to take a long-term perspective on economic developments and in policy responses and to consider the cumulative evolution of stocks, such as the stock of debt. Total debt in the global economy, including public debt, has increased significantly since the crisis (end of 2007).

These transitions and realignments inevitably bring short-term discomfort in the financial markets. But depending on the policy responses, they could eventually allow renewed and, above all, more sustainable and resilient growth, both in advanced economies and in a number of key emerging economies.