Foreword to the BIS Annual Report 2023/24 by the BIS General Manager

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General Manager's foreword

It gives me great pleasure to present the BIS Annual Report for 2023/24. The report documents how we have advanced our mission to support central banks in their pursuit of global monetary and financial stability and highlights our ongoing success in transforming the Bank as our Innovation BIS 2025 strategy enters its final year.

The past year saw central banks make important progress in securing price stability. Their swift and decisive action showed their commitment to fulfil their mandates, helping to limit the second-round effects of higher inflation and preventing a shift to a high-inflation regime. Central banks' credibility helped to limit the output costs of bringing inflation down, preserving financial stability in general. Economic growth remained firm in most jurisdictions, and labour market conditions were buoyant.

But we should not declare victory yet. Lower inflation is welcome, but low inflation is what is needed. Despite central banks' efforts, numerous forces, including loose fiscal policy, a potential catch-up in real wages and possibly a premature easing of financial conditions, are pulling in the opposite direction. Even when inflation does return to target, a soft landing is not guaranteed.

This is no time for complacency, and policymakers must stay alert to the risks. Public debt is at record highs and fiscal deficits remain too large in many countries despite the resilience of the economic cycle. While a more strongly capitalised banking sector has broadly proved it can withstand a slowdown, a period of sustained higher rates cannot be excluded. Given that financial amplification channels are particularly hard to predict, we cannot rule out further risks as pressures on borrowers mount as loans mature and debt is refinanced.

In this context, the BIS continues to support central banks in delivering on their mandates. Our economic analysis has shed new light on evolving inflation dynamics and probed risks to financial stability. Meetings held as part of the Basel Process have provided a platform for discussion and collaboration to further strengthen the resilience of the financial system and shape the financial landscape of tomorrow. And our global network of BIS Innovation Hub teams has continued to explore leading-edge technology to develop future financial architecture.

The rapid reshaping of the public payment system continues apace. In 2023, we set out a blueprint for "unified ledgers" that could realise the full benefits of tokenisation by combining tokenised central bank money with  tokenised deposits and assets on programmable digital platforms, eliminating the need for complex messaging and reconciliation systems. Various cross-border projects coordinated by the BIS, including the Innovation Hub's Project Nexus, are now exploring how new technologies could streamline cross-border settlement and transactions at the wholesale level. Achieving a truly integrated market for wholesale transactions will continue to require collaborative efforts between public authorities, central banks and market participants.

For banking services, 2023/24 was another successful year. Net profit increased to SDR 832 million, while total comprehensive income was SDR 1.5 billion. Strong demand for liquid BIS banking products saw currency deposits reach an all-time high, while the deployment of new green banking products provided new options for our customers.

In the past year, we also marked the 25th anniversary of the BIS Representative Office for Asia and the Pacific. This region continues to inspire policy developments as we look to the future, informing the BIS's work on macro-financial stability frameworks to prevent the build-up of financial imbalances and manage volatile global financial flows, and breaking new ground in efforts to advance digital finance.

The Bank continues to thrive on the sharing of perspectives and the building of capabilities to support the central bank community, from banking to research and data, learning and development. We continue to invest in our people and our capabilities. 

In this regard, I am proud that the BIS Board decided last year to pursue the project to develop our headquarters site and commence a design phase. Earlier this year, we showcased the designs from our international architectural competition at a public exhibition in Basel. We look forward to working with the design team, the local authorities and other stakeholders over the coming years to realise the architects' vision of an innovative and landmark campus that will bring together the central banking community at a single location and serve our staff, members and guests well into the future.

This year, we enter the final stage of our Innovation BIS 2025 strategy. Over 90% of the strategy is now complete. We are on track to finish on time and on budget. We will deliver on all of our initial commitments, and more. The strategy has helped deliver outstanding results this past year. And its benefits will be felt long after its formal conclusion in March 2025. As its motto suggests, it is shaping the Bank for tomorrow.

Agustín Carstens
General Manager