BIS Quarterly Review, March 2012
The BIS Quarterly Review for March 2012, released today, discusses global impact of European bank deleveraging. The March issue also provides highlights from the latest BIS data on international banking and financial activity.
Statistical tables:
- Summary tables (PDF, 21 pages, 190 kb)
- Detailed tables (PDF, 150 pages, 823 kb)
International banking and financial market developments
Special features
This article examines the effectiveness of recent Federal Reserve asset purchase programmes. We estimate that once we control for factors such as the size and the maturity profile of Treasury issuance, the new Maturity Extension Program (MEP) could have an impact comparable to the one we estimate for the Large-Scale Asset Purchase (LSAP) programme. The effectiveness of such programmes is limited by Treasury debt management policy. Indeed, the Treasury's extension of the average maturity of outstanding debt during LSAP is likely to have pushed up the 10-year bond yield significantly.
More...This special feature looks at trading activity in the foreign exchange (FX) market. By using information from surveys conducted by FX committees around the world as well as settlement data from CLS Bank, I analyse how global FX market activity was affected by the recent financial crisis. I show that FX activity continued to grow during the first year of the crisis but experienced a sharp drop after the Lehman bankruptcy, from which it recovered only slowly. I estimate that global FX activity was around $4.7 trillion a day on average in October 2011, compared with $4.0 trillion reported by the latest triennial central bank survey of foreign exchange activity conducted in April 2010.
More...The returns on bank stocks rise and fall with the business cycle, making bank equity financing cheaper in the boom and dearer during a recession. This provides support for prudential tools that give incentives for banks to build capital buffers at times when the cost of equity is lower. In addition, banks with higher leverage face a higher cost of equity, which suggests that higher capital ratios are associated with lower funding costs.
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