Claudia Buch: The changing landscape of capital flows - new patterns, actors and regulatory aspects

Introductory remarks by Prof Claudia Buch, Vice-President of the Deutsche Bundesbank, prepared for the Policy Panel at the Conference on "International Capital Flows and Financial Policies", virtual, 25 October 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you very much for the opportunity to speak at this very topical conference. The global economy stands at a crossroads: more than one and a half years after the outbreak of the worst global pandemic in the past 100 years, economic growth is recovering, albeit at a very uneven pace. Advanced economies are recovering more robustly than many emerging market economies, thanks also to their stronger fiscal policy responses to the pandemic and higher vaccination rates. The IMF Annual Meeting two weeks ago provided assurance that global coordination worked well during the crisis and that vulnerable countries need continued support. But it also highlighted the need for action – in terms of ensuring a resilient recovery from the pandemic for all countries and in terms of fighting climate change.

Against this background, let me discuss the role of cross-border capital flows from the perspective of the past, present, and future:

• Traditionally, the analysis of cross-border capital flows has focused on the costs and benefits of financial integration – with mixed evidence.
• Over the past decade, the use of micro-data has provided important insights into the effects of monetary policy and prudential regulation, in terms of differences across banks and countries.
• Looking ahead, it will be important to draw on the insights from this work to analyze how global capital flows react to future challenges – in particular, their response to climate change and climate policies.