OECD Publishes Its Business and Finance Outlook for 2018

Although capital rules have been strengthened, the business models of systemically important banks have changed little since before the crisis of 2008, says the report. One gauge of interdependence, the notional value of over-the-counter (OTC) derivatives, was USD 532 trillion in the second half of 2017, only slightly below its pre-crisis peak of USD 586 trillion in late 2007. The report also highlights that the financial outlook will also be shaped by the ability of China to manage risks related to high indebtedness and leverage in its banking, shadow banking, and wealth management industries. The extent of non-performing loans in China is obscured by the lack of information about which assets are sitting in off-balance sheet vehicles. These could disrupt growth beyond China if further changes to the structure of financial markets and institutions are not considered in major advanced and emerging economies. According to the report, open and transparent regimes for cross-border investment are needed to reduce costs and increase options regarding technology.

Related Links

• News Release
• Report Highlights (PDF)
• Report

Keywords: International, Banking, Insurance, Securities, Basel III, Shadow Banking, OTC Derivatives, China, OECD