BIS Quarterly Review, June 2012

About this issue

• The optimism that followed the ECB's second LTRO has given way to doubts about global growth and the financial health of some euro area countries and banks.
• In the fourth quarter of 2011, cross-border lending by internationally active banks fell by the largest amount since the end of 2008, with BIS reporting banks cutting claims on all regions.
• Over the past decade, countercyclical macroeconomic policies have helped to stabilise emerging market economies. This represents a significant change from earlier procyclical policies that stoked economic volatility.
• The history of the eurodollar market since the 1960s suggests that China's current account surplus need not hinder its currency's internationalisation.
• The growth of central bank balance sheets in emerging Asia over the past decade has coincided with stable inflation and stable financial systems. But balance sheets have now reached a size that distorts markets and increases the risks of inflation and financial instability.