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International Settlement

The Bank for International Settlements (BIS) is an international company limited by shares owned by central banks which "fosters international monetary and financial cooperation and serves as a bank for central banks". The BIS carries out its work through subcommittees, the secretariats it hosts and through an annual general meeting of all member banks. It also provides banking services, but only to central banks and other international organizations. It is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City.

Articles by International Settlement

Competitive effects of IPOs: evidence from Chinese listing suspensions

4 days ago

BIS Working Papers
 | 
No 888
 | 
23 September 2020

by 
Frank Packer and
Mark M Spiegel

PDF full text (742kb)
 | 
37 pages

Summary
Focus
We look at periods where all initial public offerings (IPOs) were suspended in China in order to assess the effect of IPOs on stock markets and individual listed firms.    
Contribution
Initial public offering (IPO) activity was suspended across the board three times in China between 2008 and 2015. This allows us to examine the effects of delays in IPOs that are unaffected by individual firm and industry

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Fintech and big tech credit: a new database

5 days ago

BIS Working Papers
 | 
No 887
 | 
22 September 2020

by 
Giulio Cornelli,
Jon Frost,
Leonardo Gambacorta,
Raghavendra Rau,
Robert Wardrop and
Tania Ziegler

PDF full text (2,257kb)
 | 
35 pages

Summary
Focus
Credit markets around the world are undergoing a deep transformation. While banks, credit unions and other traditional lenders remain the chief source of finance in most economies, with capital markets playing an important role in some cases, new intermediaries have recently emerged. In particular, digital lending models such

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Price search, consumption inequality, and expenditure inequality over the life-cycle

9 days ago

BIS Working Papers
 | 
No 886
 | 
18 September 2020

by 
Yavuz Arslan,
Bulent Guler and
Temel Taskin

PDF full text (952kb)
 | 
40 pages

Summary
Focus
Very often, different vendors sell the same goods at very different prices. If poorer households are willing to search more and pay lower prices than wealthier ones, consumption inequality should be lower than expenditure inequality. We explore the importance of this distinction.
Contribution
Most previous studies on consumption inequality implicitly assumed that consumption and expenditure are

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Credit supply driven boom-bust cycles

9 days ago

BIS Working Papers
 | 
No 885
 | 
18 September 2020

by 
Yavuz Arslan,
Bulent Guler and
Burhan Kuruscu

PDF full text (3,091kb)
 | 
78 pages

Summary
Focus
The housing market in the US (and in many other countries) experienced a boom-bust cycle during the last two decades. Real house prices increased by more than 30 percent between 1995 and 2006, and then dropped by a similar amount until 2011. The financial sector and the rest of the economy also experienced a boom-bust cycle. This paper studies the role of credit supply in driving these dynamics.

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BIS Quarterly Review, September 2020

13 days ago

This Quarterly Review looks at the financial market’s recovery from March’s acute stress, noting that the upturn has been uneven and corporate balance sheets remain fragile. It also analyses how lower interest rates affect stock prices and explores why equity investors have been negative towards banks even though they entered the pandemic well positioned to absorb losses thanks to post-2008 regulatory reforms.

BIS Quarterly Review
 | 
14 September 2020

PDF full text (1,360kb)
 | 
119 pages

Media briefing

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Retailer markup and exchange rate pass-through: Evidence from the Mexican CPI micro data

19 days ago

BIS Working Papers
 | 
No 884
 | 
08 September 2020

by 
Fernando Pérez-Cervantes

PDF full text (473kb)
 | 
44 pages

Paper produced as part of the BIS Consultative Council for the Americas Research Network project "Exchange rates: key drivers and effects on inflation and trade"
Summary
Focus
I use a simple model to study the econometric implications of allowing multi-product retailers to choose their markups on a price dynamics identification equation. To test the implications, I use a novel set of micro data which includes 23 million observations of

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Inflation at risk in advanced and emerging market economies

23 days ago

BIS Working Papers
 | 
No 883
 | 
04 September 2020

by 
Ryan Niladri Banerjee,
Juan Contreras,
Aaron Mehrotra and
Fabrizio Zampolli

PDF full text (5,665kb)
 | 
40 pages

Focus
Discussion of inflation risks, especially whether risks to future inflation are balanced or tilted to the upside or downside, often take centre stage in central bank policy meetings and communication. Policymakers often consider not only the most likely future path of inflation but also the full range of possible outcomes around that path. However, there is limited

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Closing the loop: AML/CFT supervision of correspondent banking

24 days ago

FSI Insights
 | 
No 28
 | 
03 September 2020

by 
Rodrigo Coelho,
Jonathan Fishman,
Amer Hassan and
Rastko Vrbaski

PDF full text (363kb)
 | 
25 pages

Under the auspice of the Financial Stability Board’s four point action plan, several international organisations have taken measures to address the decline in correspondent banking relationships, including further examining the dimensions of the decline and implications for financial inclusion and financial stability; clarifying regulatory expectations; supporting domestic capacity-building in

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Corporate zombies: Anatomy and life cycle

25 days ago

BIS Working Papers
 | 
No 882
 | 
02 September 2020

by 
Ryan Niladri Banerjee and
Boris Hofmann

PDF full text (1,096kb)
 | 
31 pages

Focus
We analyse zombie firms, defined as unprofitable firms with low stock market valuation. Our analysis takes a longer-run international perspective using firm-level data on listed non-financial companies covering 14 advanced economies and spanning three decades.
Contribution
Documenting the rise of zombie companies over the past three decades, we explore their anatomy and life cycle. Their anatomy is analysed in

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Data vs collateral

26 days ago

BIS Working Papers
 | 
No 881
 | 
01 September 2020

by 
Leonardo Gambacorta,
Yiping Huang,
Zhenhua Li,
Han Qiu and
Shu Chen

PDF full text (4,575kb)
 | 
45 pages

Summary
Focus
Collateral is used in debt contracts to mitigate the difficulties ("agency problems") that arise when the lender’s knowledge of the borrower is incomplete ("asymmetric information"). Banks usually require borrowers to pledge tangible assets, such as real estate, to help offset such problems in credit assessment, or to reduce moral hazard and enforcement problems.

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Regulating fintech financing: digital banks and fintech platforms

August 27, 2020

FSI Insights
 | 
No 27
 | 
27 August 2020

by 
Johannes Ehrentraud,
Denise Garcia Ocampo and
Camila Quevedo Vega

PDF full text (1,493kb)
 | 
39 pages

A host of new technology-enabled business models for deposit-taking, credit intermediation and capital raising have emerged in recent years.
In particular, the proliferation of digital banking and financing via web-based platforms (fintech balance sheet lending and crowdfunding) raises the question of where the regulatory perimeter should be drawn. Financial authorities now face the task of deciding

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Rise of the central bank digital currencies: drivers, approaches and technologies

August 24, 2020

BIS Working Papers
 | 
No 880
 | 
24 August 2020

by 
Raphael Auer,
Giulio Cornelli and
Jon Frost

PDF full text (6,017kb)
 | 
44 pages

Summary
Focus
Central bank digital currencies (CBDCs) are in the limelight. But the reasons for issuing them vary between countries, as do the policy approaches and technical designs. This paper looks at the economic and institutional motives behind current CBDC projects and asks how they might shape the design of such currencies.
Contribution
We draw up a database of research and development work, technical

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Corporate dollar debt and depreciations: all’s well that ends well?

August 24, 2020

BIS Working Papers
 | 
No 879
 | 
24 August 2020

by 
Julián Caballero

PDF full text (821kb)
 | 
63 pages

Summary
Focus
When a country’s exchange rate falls, the effect on corporate balance sheets may become significant. A firm that borrows in foreign currency is vulnerable to unexpected exchange rate movements if its currency exposures are not fully hedged operationally (eg the firm exports) or financially (eg with financial derivatives). A depreciation can weaken the firm’s balance sheet and thus hinder investment. This paper studies such balance sheet

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Bonds and syndicated loans during the Covid-19 crisis: decoupled again?

August 14, 2020

BIS Bulletin
 | 
No 29
 | 
14 August 2020

by 
Tirupam Goel and
José María Serena Garralda

PDF full text (683kb)
 | 
9 pages

Key takeaways
Borrowing by non-financial firms in global debt markets surged following the Covid-19 shock. Bond issuance boomed, while syndicated loan originations trailed.
Led by easier access to bond markets, large firms significantly increased their borrowing. The rest of the firms faced bottlenecks due to their reliance on a strained syndicated loan market and hurdles in switching to bond markets.
Large firms, which had

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Which credit gap is better at predicting financial crises? A comparison of univariate filters

August 12, 2020

BIS Working Papers
 | 
No 878
 | 
12 August 2020

by 
Mathias Drehmann and
James Yetman

PDF full text (599kb)
 | 
35 pages

Summary
Focus
Early warning indicators for financial crises are important inputs for central bankers to guide macroprudential policies. One such indicator -the deviation of the credit-to-GDP ratio from a long-run trend, in short the credit-to-GDP gap – is very useful in this regard. Basel III therefore suggests that policymakers use it as part of their countercyclical capital buffer frameworks. However, several authors have

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Export survival and foreign financing

August 11, 2020

BIS Working Papers
 | 
No 877
 | 
11 August 2020

by 
Laura D’Amato,
Máximo Sangiácomo and
Martin Tobal

PDF full text (704kb)
 | 
37 pages

Summary
Focus
Foreign financing provides external finance and better financing conditions to exporters in the developing world. Through this channel, it increases their export survival rates and could therefore foster economic development.
Contribution
Export survival rates are smaller in developing countries than in advanced economies, and this explains a large part of the long-term export growth

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Government Banks, Household Debt, and Economic Downturns: The Case of Brazil

August 11, 2020

BIS Working Papers
 | 
No 876
 | 
11 August 2020

by 
Gabriel Garber,
Atif Mian,
Jacopo Ponticelli and
Amir Sufi

PDF full text (663kb)
 | 
44 pages

Summary
Focus
Higher debt increases during credit booms tend to be followed by relatively sharper crisis episodes. The literature established this empirical regularity at the country or region level. Using contract level information from the Brazilian Credit Registry matched with information on labor income from the Ministry of Labor, this paper explores the individual borrower level

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The impact of credit risk mispricing on mortgage lending during the subprime boom

August 11, 2020

BIS Working Papers
 | 
No 875
 | 
11 August 2020

by 
James A Kahn and
Benjamin S Kay

PDF full text (2,294kb)
 | 
66 pages

Summary
Focus
Our paper examines the impact of beliefs and pricing mistakes during the boom in subprime lending of the early 2000’s. We collect original data on private and FHA mortgage insurance premiums from 19992016. This details the evolution of offerings in their scope as well as in their price. To characterize the overall pricing of mortgage insurance, as borrowers substitute among loan types, we construct chainweighted price

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Demographic Origins of the Decline in Labor’s Share

August 11, 2020

BIS Working Papers
 | 
No 874
 | 
11 August 2020

by 
Andrew Glover and
Jacob Short

PDF full text (943kb)
 | 
43 pages

Summary
Focus
We study the aging demographics of the workforce in the United States. Since 1980, the average age of the workforce has increased and the share of total earnings of older workers has risen significantly. Concurrent with these demographic changes, the share of income paid to workers (labor’s share) has declined. We hypothesis that as a worker ages their labor market dynamism declines and the employer has greater labor

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Principles for operational resilience

August 6, 2020

Summary of document history  

Previous version
Previousconsultation
This version
Subsequentconsultation
Subsequentversion

This version

BCBS
 | 

Consultative

 | 
06 August 2020
 | 

Status:  Open
[Upload comments]

PDF full text (229kb)
 | 
13 pages

Topics:
Operational risk

Through the publication of this consultative document, the Committee seeks to promote a principles-based approach to improving operational resilience. The principles aim to strengthen the ability of banks to

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Revisions to the principles for the sound management of operational risk

August 6, 2020

Summary of document history  

Previous version
Previousconsultation
This version
Subsequentconsultation
Subsequentversion

Principles for the Sound Management of Operational Risk

30 Jun 2011

Type:  Guidelines

Status:  Current

This version

BCBS
 | 

Consultative

 | 
06 August 2020
 | 

Status:  Open
[Upload comments]

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Prudential response to debt under Covid-19: the supervisory challenges

August 6, 2020

FSI Briefs
 | 
No 10
 | 
06 August 2020

by 
Johannes Ehrentraud and
Raihan Zamil

PDF full text (420kb)
 | 
11 pages

Highlights
In response to the Covid-19 pandemic, governments and banks have introduced public guarantees and payment deferrals to support struggling borrowers, while the Basel Committee on Banking Supervision (BCBS) and national authorities have provided guidance on how these relief measures should be considered in assessing credit risk in prudential frameworks.
The regulatory relief measures introduced by the BCBS provide banks with

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Central banks and financial stability: A reflection after the Covid-19 outbreak

August 4, 2020

FSI Occasional Papers
 | 
No 16
 | 
04 August 2020

by 
Fernando Restoy

PDF full text (240kb)
 | 
13 pages

How should policy objectives be assigned between different authorities? Traditionally, this question has revolved around identifying conflicts and complementarities between their various remits. Equally important, however, is the question of whether specific policy instruments can be neatly assigned to specific objectives. When a specific policy instrument can significantly influence more than one objective, the case for assigning each of those objectives

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Accounting standards and insurer solvency assessment

July 31, 2020

FSI Insights
 | 
No 26
 | 
31 July 2020

by 
Michelle Chong-Tai Bell,
Peter Windsor and
Jeffery Yong

PDF full text (707kb)
 | 
38 pages

The paper explores the use of accounting standards for insurer solvency assessment in the context of the implementation of IFRS 17. The paper is based on the results of a survey of 20 insurance supervisors.  Overall, IFRS 17 is a welcome development but there will be challenges of implementation.  Not many insurance supervisors intend to use IFRS 17 as a basis for solvency assessment of insurers. Perceived

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Covid-19: Boon and bane for digital payments and financial inclusion

July 24, 2020

FSI Briefs
 | 
No 9
 | 
24 July 2020

by 
Nana Yaa Boakye-Adjei

PDF full text (273kb)
 | 
11 pages

Highlights
Authorities around the world have moved to encourage the use of digital payments in response to Covid-19. 
Some of these measures facilitate the use of digital payments during lockdown, while others provide longer-term support for fintech players and financial innovation more broadly. 
For emerging market and developing economies, the measures respond to the unexpected opportunity to further promote financial inclusion objectives through the

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Inflation at risk from Covid-19

July 23, 2020

BIS Bulletin
 | 
No 28
 | 
23 July 2020

by 
Ryan Niladri Banerjee,
Aaron Mehrotra and
Fabrizio Zampolli

PDF full text (918kb)
 | 
9 pages

Key takeaways
The pandemic has increased downside tail risks in advanced economies (AEs), while it has increased both downside and upside tail risks in emerging market economies (EMEs).
The collapse in output and oil prices, on balance, increases downside inflation risks.
Recent exchange rate depreciations increase upside risks to inflation in EMEs.
Tighter financial conditions raise both downside and

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Effects of Fed policy rate forecasts on real yields and inflation expectations at the zero lower bound

July 21, 2020

BIS Working Papers
 | 
No 873
 | 
21 July 2020

by 
Gabriele Galati and
Richhild Moessner

PDF full text (654kb)
 | 
15 pages

Focus
Long-term real interest rates play an important part in the transmission of monetary policy measures to aggregate demand. But there are concerns that the unconventional monetary policy tool of forward guidance may not be effective when policy rates fall to zero, ie reach their zero lower bound (ZLB). A further concern is that the publication of policy rate forecasts at the ZLB may be perceived as an unconditional commitment,

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Effects of credit restrictions in the Netherlands and lessons for macroprudential policy

July 20, 2020

BIS Working Papers
 | 
No 872
 | 
20 July 2020

by 
Gabriele Galati,
Jan Kakes and
Richhild Moessner

PDF full text (421kb)
 | 
33 pages

Focus
Macroprudential instruments, which play a key role in the current policy debate, have a long history. Some of the tools in current use originated as monetary policy instruments that were deployed in order to influence the credit supply. For example, the Netherlands used credit restrictions as a monetary policy instrument from the 1960s to the early 1990s. We study the effects of these credit restrictions on

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