The 75th Annual Report of the Bank for International Settlements for the financial year which began on 1 April 2004 and ended on 31 March 2005 was submitted to the Bank's Annual General Meeting held in Basel on 27 June 2005.
With thanks to all participants who have responded to the BIS' Annual Report Survey between July and September 2005.
Introduction: so far, so good
Looking back over the past two decades, several global economic trends can be identified. Lower and less volatile inflation, accompanied by higher and less volatile output growth, were welcome features. Less welcome were growing external and internal imbalances, the latter leading to more frequent periods of financial stress often associated with rapid increases in credit, asset prices and fixed investment. All these trends have their roots in three major structural changes: the spread of liberalisation throughout the global economy; the development of more complete financial markets; and the increased focus of central banks on low inflation. Looking back over the last fiscal year, strong growth and low inflation were maintained, but so too were external imbalances. Financial markets showed further evidence of overextension, reflecting the search for yield given very low policy rates, and house prices in many countries set new records.
The views expressed here do not necessarily reflect the views of the BIS member central banks.