Foreword to the BIS Annual Report 2022/23 by the BIS General Manager

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General Manager's foreword

It is my pleasure to present the BIS's Annual Report for 2022/23. The report highlights our commitment to global monetary and financial stability, and our ongoing role as the global forum for central bank cooperation. It also documents the progress made in advancing our Innovation BIS 2025 strategy.

The past year has challenged central banks. High inflation and financial stability concerns emerged in tandem. At the same time, digital innovation, particularly in payment systems, gathered pace.

The global inflation surge that began in 2021 has started to subside. But, in most countries, inflation remains far too high. Much of the progress in lowering inflation has come from easy wins, like falling commodity prices and normalising supply chains. The "last mile" of returning inflation to target will be harder. Central banks' commitment to low inflation is clear. The past year saw the most rapid and synchronised worldwide monetary policy tightening in decades.

Tighter monetary policy was necessary, but not painless. Business models that relied on low-for-long interest rates felt the strain. Bank closures in early 2023 were the most striking example, but far from the only ones. As the structural forces that held down inflation in recent decades subside, interest rates may need to stay higher for longer. In the coming years, economies must rely on supply side reforms, rather than monetary and fiscal stimulus, to drive sustainable growth.

The BIS helped central banks to navigate this complex policy landscape. Our economic analysis shed light on inflation dynamics and the causes of financial instability. And it made further progress in charting a course to build financial systems and infrastructures fit for the challenges of tomorrow. Regular meetings held in the context of the Basel Process fostered the exchange of views and experiences, while BIS-hosted committees made significant headway on evaluating the effects of the post-financial crisis reforms, and on proposals for mitigating risks arising from cryptoassets, financial market infrastructures and climate change.

Investment in our Innovation BIS 2025 strategy continued to pay dividends. The expansion of our Innovation Hub is almost complete, with the opening of the Eurosystem Centre taking place in March 2023. Leveraging our ambition to be at the forefront of thought leadership on innovation, we have expanded our insights and research and delivered a number of projects on the development of public goods to support central banks and improve the functioning of money and the financial system.

For banking services, 2022/23 was another successful year. Despite volatile market conditions, net profit increased to SDR 679 million by end-March 2023, while total comprehensive income was SDR 414 million. Strong demand for liquid BIS banking products as well as the Bank's foreign exchange and gold services bolstered profitability. Upgraded technological capabilities in our trading and reporting systems provided an enhanced customer experience to our clients.

Our Representative Offices strengthened relationships with central banks in their respective regions and helped to shape policy debates in Asia and the Americas. We were pleased to mark our 20th anniversary in the Americas in November 2022. Meanwhile, our Financial Stability Institute undertook a number of projects to support international cooperation and collaboration in the areas of financial technology, climate-related financial risks, crisis management and other regulatory and supervisory-related issues.

We have put additional effort into improving the way we work. Taking on board the lessons of the Covid-19 pandemic, we have explored new ways of working together and sought to improve and expand our working space for the future. We have also invested in our staff through expanded mentoring and leadership programmes and taken further steps to promote a workforce that reflects the full diversity of our membership. In December 2022, we announced the winning design from an architecture competition to develop the BIS headquarters site in Basel. The new building would create a campus-like environment and provide modern facilities to accommodate the enlargement of global meetings and the growth in our activities.

It is the efforts of our staff and management that have laid the foundations for this future expansion. Reviewing our progress over the past year, I am deeply grateful to all our colleagues for their support, dedication and adaptability.

Agustín Carstens
General Manager