September 23, 2018

BIS published the September 2018 issue of its quarterly review. BIS also published speeches by Claudio Borio, the Head of the Monetary and Economic Department, and Hyun Song Shin, the BIS Economic Adviser and Head of Research.

The four special features in this BIS Quarterly Review are on how cryptocurrencies react to news about possible actions by regulators, on the extent of fintech credit activity based on income levels in countries, on zombie firms (entities that appear to be insolvent but keep on operating), and on reviewing ways to estimate the term premium embedded in bond yields. The BIS quarterly review highlights the following:

  • It shows that international debt securities issuance now outweighs bank loans as the main driver of international credit to firms, households and governments. 
  • It explores the reasons for a surge in bank finance to highly indebted or non-investment-grade borrowers. These include strong investor demand, a pickup in securitization, and a changed regulatory stance in the U.S.; however, the rapid expansion can create vulnerabilities.
  • The review uses BIS banking statistics on Turkey as an example of how to analyze bank exposures to country risk. At the end of March 2018, foreign banks had USD 223 billion in outstanding loans, securities holdings, and other claims vis-à-vis residents of Turkey. However, the absolute size of exposures might not be the most relevant indicator. Analysts may, for instance, need to compare exposures with the size of bank capital. The raw figures should also be viewed in the context of banks' business models, financial health, consolidation and accounting practices, and risk transfers.

 

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Keywords: International, Banking, Quarterly Review, Cryptocurrencies, Fintech, BIS

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