BIS Quarterly Review, March 2022

Before the sharp escalation of geopolitical tensions ushered in a new wave of uncertainty, financial markets had been jolted by signals of a global shift towards a quicker pace of monetary policy tightening.

In this feature, the authors discuss the important role of non-bank financial firms in syndicated lending to non-financial firms. They find that lending by non-banks is more concentrated, more volatile and - being riskier - carries higher spreads than that by banks. In domestic crises, non-banks curtail lending to foreign borrowers, thereby transmitting shocks across countries. 

In this feature, the authors examine a new dataset on global banks' foreign branches and subsidiaries. They find that branches, which facilitate especially international corporate banking, have grown relative to locally focused subsidiaries. Branches are riskier for host countries, and authorities, particularly in advanced economies, seem to have tightened control over them. 

In this feature, the authors analyse potential global GDP paths following the Covid-19 crisis. Without policy intervention, growth could be slower than in the 2010s. While pandemic-induced shifts in technology use and resource reallocation could provide a modest boost, a housing bust and a disorderly climate transition represent disruptive scenarios.