BIS Quarterly Review, March 2018

Stock markets across the globe underwent a sharp correction in late January and early February. After a steady rally that had lasted several months, capped by the strongest January since the 1990s, the release of a labour market report showing higher than expected US wage growth heralded a burst of heightened activity. ...

The "common lender channel" is a mechanism that facilitates the spread of financial shocks around the globe. Creditor banks withdraw from previously unaffected countries when highly exposed to the epicentre of a crisis. At the time of the Asian financial crisis in 1997, Japanese banks dominated lending to emerging Asia. ...

Household and international debt (cross-border or in foreign currency) are a potential source of vulnerabilities that could eventually lead to banking crises. We explore this issue formally by assessing the performance of these debt categories as early warning indicators (EWIs) for systemic banking crises. ...

As the global economy becomes more integrated, there is a growing tension between the nature of economic activity and the measurement system that attempts to keep up with it. Many policies are still determined by measuring economic activity at the national level. ...

Retail payment systems continue to become faster and more convenient. Yet, despite increased use of electronic payments around the world, there is scant evidence of a shift away from cash. As the appetite for cash remains unabated, few societies are close to "cashless" or even "less-cash". ...

Price-to-book ratios have been unusually low for many banks since the Great Financial Crisis. Ratios below one, in particular, have been seen as reflecting market concerns about banks' health and profitability as well as the need for shifts in business models. ...

This special feature studies the risks posed by the rapid rise in property developer debt in several Asian economies in recent years. Gradually, the firms involved are shifting away from traditional bank loans and choosing to issue debt securities, often in foreign currency. ...

The popularity of passive investing through index mutual funds and exchange-traded funds (ETFs) has grown substantially over recent years, displacing higher-cost active investment styles. A shift towards passive investing could affect securities markets in two key ways. ...