Consolidated banking statistics

What would balance sheets look like if the borrowing through FX swaps and forwards were recorded on-balance sheet, as the functionally equivalent repo debt is? We combine various data sources to estimate the size, distribution and use of this "missing" debt and to begin to assess its implications for financial stability. A key finding is that non-banks outside the United States owe large sums of dollars off-balance sheet through these instruments. The total is of a size similar to, and probably exceeding, the $10.7 trillion of on-balance sheet dollar debt. Even when this debt is used to ...

The post-crisis period has seen a considerable shift in the composition and drivers of international bank lending and international bond issuance, the two main components of global liquidity.

We document the triangular relationship formed by the strength of the US dollar, cross-border bank lending in dollars and deviations from covered interest parity (CIP).

Covered interest parity verges on a physical law in international finance. And yet it has been systematically violated since the Great Financial Crisis. Especially puzzling have been the violations since 2014, even once banks had strengthened their balance sheets and regained easy access to funding. We offer a framework to think about these violations, stressing the ...

Banks and bond investors have extended $9 trillion of US dollar credit to non-bank borrowers outside the United States. This has relevance for the discussion of global liquidity and global monetary policy transmission. This paper contributes to this policy discussion by analysing the links between US monetary policy, including unconventional monetary policy, leverage and flows into bond funds, on the one hand, and dollar credit extended to non-US borrowers, on the other. We find that prior to the crisis, banks drew on low funding rates and low-cost leverage to extend dollar credit to non-US orrowers. After the Federal Reserve announced its large-scale bond purchases in 2008, however, bond investors responded to compressed long-term rates by buying dollar bonds from non-US borrowers. The balance of dollar credit transmission has shifted from global banks to global bond investors.

With major central banks having re-established temporary foreign exchange swap facilities to alleviate growing strains in short-term funding markets, European banks' US dollar funding patterns are back in the news.

Among the policy responses to the global financial crisis, the international provision of US dollars via central bank swap lines stands out.

Understanding the global financial crisis and the stresses on bank balance sheets requires a perspective on banks' international investment positions and how these positions were funded across currencies and counterparties.

This article examines the importance of foreign banks in the provision of credit to emerging market borrowers. It documents this along two dimensions: the share of total credit provided and the concentration of claims from different foreign banking systems. The share of credit from foreign banks in total credit to emerging market economies has fallen since the Great Financial Crisis, but still stands at 15-20% on average, with the remainder provided by domestic banks or non-bank creditors. ...

We trace the imprint of the ECB's expanded asset purchase programme (APP) on international bond portfolios and euro-denominated deposits. Our analysis suggests that non-bank financial institutions (NBFIs) located outside the euro area sold large volumes of euro area government bonds and kept a substantial fraction of the proceeds as euro-denominated deposits, primarily in UK-resident banks. ...

This special feature explores the role of banks from emerging market economies (EMEs) in global banking. Over the past decade, the cross-border activity of EME banks has been growing at a faster pace than that of banks from advanced economies. This has been largely driven by increasing EME-to-EME interlinkages, which often make up more than half of EMEs' cross-border borrowing. EME banks make use of their global networks of affiliates abroad for the majority of their cross-border lending to other EMEs. In the cross-border interbank market, EMEs with more developed banking systems tend to be net recipients of funds, whereas EMEs with less developed ones tend to be net providers. ...

We construct a new data set of quarterly international capital flows by sector, with an emphasis on debt flows.

This paper explores the basic question of whose monetary policy matters for banks' international lending.

We look back at past episodes of financial stress in Asia with a forward-looking perspective.

There is no consensus in the empirical literature on the direction in which U.S. monetary policy affects cross-border bank lending.

The "common lender channel" is a mechanism that facilitates the spread of financial shocks around the globe. Creditor banks withdraw from previously unaffected countries when highly exposed to the epicentre of a crisis. At the time of the Asian financial crisis in 1997, Japanese banks dominated lending to emerging Asia. ...

Exchange rate fluctuations influence economic activity not only via the standard trade channel, but also through a financial channel, which operates through the impact of exchange rate fluctuations on borrowers' balance sheets and lenders' risk-taking capacity.

The empirical gravity literature finds geographical distance to be a large and growing obstacle to trade, contradicting the popular notion that globalization heralds "the end of geography".

What is the role for supply and demand forces in determining movements in international banking flows?

We assess the role of external debt in shaping the dynamics of domestic credit cycles.

A large literature assesses the benefits that foreign banks bring to emerging market economies (EMEs), drawing evidence from datasets that track the ownership of banks located in a particular country.

We investigate how the use of a currency transmits monetary policy shocks in the global banking system.

We profile the US dollar debt incurred by borrowers in a dozen prominent emerging market economies (EMEs). These countries account for the bulk of total US dollar debt owed by EMEs. We measure the dollar borrowing of non-banks resident in these economies as well as that of their affiliates offshore, and relate these items to commonly used debt measures. We also discuss the limitations of our data. These data fail to ...

US dollar credit is growing quickly outside the United States, especially in Asia, and in some economies it has outpaced overall credit growth. Cross-border sources of credit bear watching in view of their record of outgrowing overall credit in credit booms. Foreign currency and cross-border sources of credit raise policy issues.

Over the past decade, many emerging markets have increased their dependence on credit from foreign banks.

Cross-border links between banks and non-bank financial institutions (NBFIs) gained momentum in recent years.

Prudential regulation of banks is multi-layered: policy changes by home-country authorities affect banks' global operations across many jurisdictions; changes by host-country authorities shape banks' operations in the host jurisdiction regardless of the nationality of the parent bank.

As the global economy becomes more integrated, there is a growing tension between the nature of economic activity and the measurement system that attempts to keep up with it. Many policies are still determined by measuring economic activity at the national level. ...

This paper argues that the decline in cross-border banking since 2007 does not amount to a broad-based retreat in international lending ("financial deglobalisation").

We combine the BIS international banking statistics with the IBRN prudential instruments database in a global study analyzing the effect of prudential measures on international lending.

This feature explores the resilience of banks' balance sheets after the 2008-09 financial crisis through the lens of a unique global data set crossing bank nationality and host country. We start by documenting post-crisis changes in the structure of BIS reporting banks' global operations across bank nationalities. We then zero in on the funding mix of banks' foreign affiliates (branches and subsidiaries) on the eve of the crisis, and how it ...

Non-US banks' affiliates in the United States took on about half of the claims on the Fed that it created to pay for its large-scale bond purchases. They did so largely through uninsured branches that were not subject a new FDIC charge on wholesale funding payable by US-chartered banks.

The financial crisis has led to a reconsideration of banks' global business models.

International banking centres have attracted renewed interest recently, as established centres compete over more dimensions while new centres emerge.

We propose a distress measure for national banking systems that incorporates not only banks' CDS spreads, but also how they interact with the rest of the global financial system via multiple linkage types.

Cross-border bank credit is dominated by a small number of very sizeable links between banks in one country and borrowers in another. The largest-sized cross-border banking links are mainly between major advanced economies. Concentration increased up until the Great Financial Crisis (GFC) and has abated only slightly since. It is higher for interbank credit than for credit to the non-bank sector. Despite the substantial decline in interbank credit in the aftermath of the GFC, concentration in the interbank segment has remained high. ...

Credit risk transfers shift a bank's country exposures from one counterparty country to another. Risk transfer patterns can shed light on how creditor banking systems assess and manage credit risks across counterparty countries. These patterns are closely linked to the business models and international footprint of global banks and corporates. Global banks have taken on more credit risks vis-à-vis some major emerging market economies - in particular in Asia. This points both to the enlarged international footprint of corporates and banks from these countries, and to the ...

The BIS regularly seeks to enhance its statistical offerings to support monetary and financial stability analysis, in close coordination with central banks and other national authorities and international organisations. The exposure of economies to foreign currency risk is one potential source of vulnerability that has received increased attention in recent years, and the relevant data gaps are being addressed in the second phase of the Data Gaps Initiative (DGI) endorsed by the G20 (BIS-FSB-IMF (2015), FSB-IMF (2017)). Concurrently with this issue of the Quarterly Review, the BIS is expanding the data it publishes on exchange rates, on the currency composition of cross-border positions and on ...

The BIS international banking statistics have evolved over time in response to changes in the international financial system. The latest enhancements to these statistics introduce information about banks' domestic business and add more details about the ...

The term global liquidity is used in a variety of ways.

Global liquidity has become a key focus of international policy debates over recent years. The concept of global liquidity, however continues to be used in a variety of ways and this ambiguity can lead to potentially undesirable policy responses. This feature attempts to further the understanding of the global liquidity concept, its measurement and policy implications. It argues that policy responses to global liquidity call for a consistent framework that considers all phases of global liquidity cycles, countering both surges and shortages.

This article outlines a broad framework for assessing system-wide funding risks and analysing banks' role in the transmission of shocks across countries.

This paper illustrates various applications of the BIS international banking statistics.

Activity in the international banking market has grown in recent years, both in absolute terms and relative to aggregate measures of economic activity and liquidity.

The BIS consolidated banking statistics have been expanded to better capture banks' country risk exposures.

In this article we compare the two data sets, adjusting for conceptual and practical differences.