79th Annual Report, 2008/09
In its 79th Annual Report, the BIS looks at the narrow path ahead leading out of the financial crisis. The Report underlines the need to focus clearly on the medium term and on sustainability when designing both macroeconomic and financial policy responses. The report was presented at the Bank's Annual General Meeting in Basel, Switzerland on 29 June 2009.
79th Annual Report by chapter
1. the prelude, leading up to the March 2008 takeover of Bear Stearns;
2. the gradual deterioration in financial conditions from mid-March to the failure of Lehman Brothers on 15 September 2008;
3. from mid-September to late October, a global loss of confidence, a massive flight to quality and the near collapse of the financial system;
4. from late October, the severe decline in the global economy; and
5. beginning in mid-March 2009, the deepening downturn and the first signs of stabilisation. More...
Two issues are now of particular concern for emerging market economies: risks that the severity of the downturn could deter a recovery in capital flows and further impair growth; and whether new initiatives to improve access to external finance through official channels could help reduce reliance on costly reserve accumulation. More...
Traditional and unconventional central bank actions have been matched in many places by equally aggressive fiscal expansion. Clearly, different countries have different needs and capacities for increases in government spending. In any case, an assessment of the various spending programmes will have to wait until they take full effect. More...
Looking further ahead, ensuring sustained financial stability requires a redesign of macroeconomic as well as regulatory and supervisory policies with an eye to mitigating systemic risks. For macroeconomic policies, this means leaning against credit and asset-price booms; for regulatory and supervisory policies, this means adopting a macroprudential perspective. Importantly, reform must focus on identifying systemic risks arising in all parts of the financial system - risks that arise from the complexity, opacity and ownership concentration of financial instruments; from the counterparty risk and margining practices in financial markets; from the risk of joint failure created by interconnections and common exposures; and from the procyclicality that is inherent in financial institution management and can be compounded by microprudential regulation. More...
This part of the Annual Report reviews the organisation of the Bank for International Settlements, summarises its activities for the financial year 2008/09 and presents its financial results.
The work of the Bank during the financial year was dominated by the need to deal with the challenges posed by the intensifying global financial crisis. Financial stability issues became a main focus and work programmes were redirected to concentrate on this, both in support for the committees hosted at the BIS and in the Bank's research activities.
The market turmoil confronted the Bank with sustained demand to accept deposits and made it difficult to place funds profitably at an acceptable level of risk. As a result of actions taken by the BIS in its banking and risk management practices to address these challenges, the Bank's currency deposit base decreased by 16% during the financial year 2008/09 and the balance sheet total decreased by 18%. The net profit for 2008/09 amounted to SDR 446.1 million, 18% lower than for the previous financial year.
More...