Bank for International Settlements – BIS

🌐 Developing tech-savvy financial supervisors – discussion at the BIS-IMF Symposium 🌐 The 4th BIS-IMF symposium, hosted by the International Monetary Fund in Washington D.C. on 13-14 March, 2025 brought together 50 participants from 25 jurisdictions to exchange views on how technological developments are shaping capacity building priorities of financial sector supervisors. The symposium is a unique gathering of international financial institutions, central banks, financial sector supervisors, training providers and donor agencies – bringing together the entire supervisory capacity building ecosystem to advance their collective efforts. The symposium discussed challenges and effective approaches to upskill financial regulators to deal with technological developments such as the use of AI by financial institutions, and operational resilience and cyber security. Participants also shared useful experiences on how to upskill supervisory staff to leverage technology to enhance the efficiency and effectiveness of financial supervision, including improving the exercise of sound supervisory judgement. Tobias Adrian, IMF Financial Counsellor & Director of the Monetary and Capital Markets Department shared some reflections on the event “The BIS-IMF Symposium serves as a valuable platform for capacity development. This dialogue enables us to collectively leverage innovative technologies and strengthen our efforts to equip our membership in tackling the financial sector’s evolving challenges.” “Capacity building is like the underwater part of an iceberg: it remains unseen, but is essential for effective and innovative policymaking,” Andrea M Maechler said at the event. “Tech-savvy supervisors are better equipped to deal with fast-evolving tech-related risks and benefit from new technologies like AI.” The BIS, through its Financial Stability Institute, will continue to closely collaborate with the IMF in supporting capacity building of financial sector supervisors globally, including through our joint online courses on banking supervision and resolution. #IMF #FinancialSupervision #CapacityBuilding #AI #CyberSecurity #FinancialStability

Hyun Song Shin summarises the March 2025 #BISQuarterly Review and, along with Gaston Gelos and Frank Smets, answers journalists’ questions about market developments, the state of the global economy and fiscal policy. “While uncertainty has increased, the base case is still for a soft landing for the global economy, based on the latest data. Policy uncertainty of all stripes leaves households and firms guessing about future policy settings. Prolonged uncertainty tends to lower consumer spending, especially on durable goods. For firms, uncertainty is a drag on business investment and hiring." – Hyun Song Shin “The central banks can help by focusing on their own mandate and making sure that inflation expectations remain anchored and do not add to the uncertainty. You want to move in small steps when you are in a very uncertain world. When some of that uncertainty is revealed then central banks have to be flexible and agile.” – Frank Smets “These are normal adjustments to changes in fundamentals in reaction to news, and in that sense, they are not unusual. Of course, when there are persistent large deviations in particular shorter-term yields, it can, over time, induce the build-up of cross border positions of carry trades and similar activities.” – Gaston Gelos Listen to our #BISness podcast on the BIS website, on Apple Podcasts, Spotify and all major podcast listening platforms. Apple Podcast: https://apple.co/3XPvk8l Spotify: https://spoti.fi/3XQYe83 Our website: https://bit.ly/3FteNhg

Over the past two decades, the heft of non-bank financial intermediaries has grown and so has their interdependence with banks, with potential implications for financial stability. In the latest BIS Quarterly Review, Matteo Aquilina, Giulio Cornelli and Nikola Tarashev examine whether investment funds contribute to a tightening of market conditions when banks face higher-than-normal pressure. They find that different types of investment fund exhibit different dynamics. Inflows to corporate bond exchange-traded funds can help alleviate market pressure on banks. By contrast, outsize outflows from open-ended corporate bond mutual funds contribute to a tightening of market conditions at an unfavourable time for banks. Notably, these outflows from mutual funds are driven by funds with relatively low liquidity buffers, thus generating significant sales of illiquid assets. https://bit.ly/3DzPNae #BISQuarterly #MutualFunds #ExchangeTradedFunds

The Basel Committee on Banking Supervision has progressed in its work to develop a suite of practical tools to support supervisors in their day-to-day work as part of its efforts to strengthen supervisory effectiveness in light of the lessons learned from the 2023 banking turmoil. At its 12-13 March meeting, the Basel Committee, agreed to publish an update on the outcome of this work by mid-2025. As part of its broader work on the supervision of operational resilience, and in light of the evolving technology landscape and rising information technology incidents globally, the Committee agreed to analyse recent developments and global practices related to banks’ information and communication technology risk management. It plans to publish in 2026 a report summarising its findings. The Committee also discussed its work to assess banks’ interconnections with non-bank financial intermediation (NBFI), and agreed to conduct over the coming year a deep-dive investigation on synthetic risk transfers, which can be used to transfer banks’ credit risk to NBFI entities, helping banks manage risk and/or reduce regulatory requirements. Finally, as part of its Regulatory Consistency Assessment Programme, the Committee reviewed and approved the assessment reports on the implementation of the Net Stable Funding Ratio and large exposures framework by Türkiye. The reports will be published next month. Read more here: https://lnkd.in/eNT_fqHc #BaselCommittee #BaselIII

In the last half century, borrower countries have been repeatedly rocked by swings in international capital flows, which can expose vulnerabilities and thus be destabilising. In the latest BIS Quarterly Review, Torsten Ehlers, Bryan Hardy and Patrick McGuire show how BIS statistics can shed light on the international dimensions of credit and their impact on financial stability in borrower economies. Rapid international credit growth can lead to domestic credit booms, posing risks to financial stability. Local lending by foreign banks is a stable addition to domestic credit, but their cross-border lending tends to dry up first when financial volatility arises. Credit in foreign currencies is increasingly channelled through capital markets rather than through banks, bringing both benefits and risks. https://bit.ly/3FflYwi #BISStatistics

Private credit funds – that is, specialised investment vehicles which typically lend to small or medium-sized firms – have increased their assets under management from $200 million in the early 2000s to over $2.5 trillion today. In the latest BIS Quarterly Review, Fernando Avalos, Sebastian Doerr and Gabor Pinter study the drivers of private credit’s rapid growth. The footprint of private credit is larger in countries with lower policy rates, more stringent banking regulation and a less developed banking sector. To further understand how private credit competes with banks, the authors examine lenders’ cost of capital. Evidence for business development companies, an important private credit investment vehicle, shows that their cost of capital relative to that of banks has steadily declined over the past decade, eroding banks’ initial funding advantage and spurring the growth of private credit. Read the full article: https://bit.ly/3FcW78o

The green bond market has grown exponentially since 2015. Green bonds have emerged as an important tool in financing the transition to sustainable economic development. But what do we know about them? In the BIS Quarterly Review, Jakub Demski, Yingwei Dong, Patrick McGuire and Benoit Mojon present an analysis of the growth of the green bond market and its relationship with greenhouse gas emissions. Countries with stricter emissions policies have seen the most significant growth in green bond issuance. Green bonds are associated with reductions in corporate emissions, suggesting that green bond financing strategies can reflect firms' broader commitments to greening their operations. Read more at: https://bit.ly/3XvXhls #SustainableFinance #GHGEmissions #BIS #ClimatePolicy #Sustainability #ESG #FinanceForFuture #GreenBonds #BISQuarterly

Inflation targeting has evolved materially over the last three decades. With several major central banks conducting reviews of their monetary policy frameworks this year, in this article Claudio Borio and Matthieu Chavaz use a new database to analyse how inflation targeting frameworks have evolved since first adopted in 1990. Frameworks have gained flexibility by giving increasing weight to objectives for employment or growth and with increasingly vague time horizons to meet the inflation target. But the definition of the numerical target has become stricter. These trends are stronger in advanced economies, opening a gap with emerging economies. Read the full article: https://bit.ly/4isndGY #BISQuarterly

The BIS Quarterly Review is now available on our website. https://bit.ly/41VOo7l The March issue includes analysis on developments in financial markets during the review period, private credit, green bonds, the evolution of monetary policy frameworks and the international dimensions of credit. #BISQuarterly

Coming soon! The #BISQuarterly will be out on 11 March with analysis on developments in financial markets, private credit, the evolution of monetary policy frameworks and the international dimensions of credit. https://bit.ly/4iwvMAb