Strengthening foundations for the future
Speech by Mr Pablo Hernández de Cos, General Manager of the BIS, on the occasion of the Bank's Annual General Meeting, Basel, 28 June 2026.
The speech introduces Chapters I and II of the BIS Annual Economic Report 2026. It casts the current outlook for the global economy as one of progress and peril. Global growth proved resilient in 2025 thanks to lower than expected effective tariffs, firms' adaptation to higher tariffs and optimism driven by artificial intelligence (AI). Yet the recent Middle East conflict has lifted inflation and uncertainty. Vulnerabilities include the return of inflation, the risk of an abrupt end to the AI investment boom, and stretched financial valuations. Moreover, high public debt and the rise of non-bank financial institutions tighten the fiscal-financial stability nexus, raising the risk of abrupt sovereign bond repricing and market dysfunction. This complicates monetary policy calibration and raises the likelihood of central bank market intervention. These challenges call for a firm commitment to price stability, rebuilding fiscal buffers, congruent regulation and temporary, targeted and easily reversible liquidity backstops.
