BIS Quarterly Review, December 2013

After a summer swoon, bonds and stocks in advanced economies bounced back on the view that the Fed would continue with the current pace of asset purchases and low policy rates. Yield-seeking bond investors made it easier for firms to obtain cheap credit on loose terms. More...

Cross-border claims of BIS reporting banks declined in the second quarter of 2013, after remaining stable in the previous quarter. Reporting banks cut their cross-border lending to all sectors. Previously, lending to non-banks had risen as claims on banks had fallen. More...

Trading in the FX market reached an all-time high of $5.3 trillion per day in April 2013, a 35% increase relative to 2010. Non-dealer financial institutions, including smaller banks, institutional investors and hedge funds, have grown into the largest and most active counterparty segment.

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This special feature looks at trading activity in the foreign exchange market between the Triennial Surveys conducted in 2010 and 2013 and in the months following. We estimate that the $5.3 trillion per day reported for April 2013 was a peak, with activity falling subsequently by $300 billion to $5 trillion per day in October.

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Derivatives markets in emerging economies have continued to grow since 2010, driven mostly by very strong growth in the OTC market. Emerging market currencies have become more international as offshore markets are a major contributor to FX turnover.

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This feature analyses the market for OTC interest rate derivatives using data from the Triennial Central Bank Survey. Low and stable interest rates after the financial crisis went hand in hand with low but still positive turnover growth in most currencies.

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