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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

Global lending conditions and international coordination of financial regulation policies

28 days ago

by Enisse KharroubiUsing a model of strategic interactions between two countries, I investigate the gains to international coordination of financial regulation policies, and how these gains depend on global lending conditions. When global lending conditions are determined non-cooperatively, I show that coordinating regulatory policies leads to a Pareto improvement relative to the case of no …

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Could corporate credit losses turn out higher than expected?

August 18, 2021

* In a recent survey, US households say they are more likely to trust traditional financial institutions than government agencies or fintechs to safeguard their personal data. They have far less trust in big techs. * This pattern differs across demographic groups: respondents from racial minorities have less trust in financial institutions, while younger respondents …

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Macroeconomic effects of Covid-19: a mid-term review

August 11, 2021

This article provides an interim assessment of the macroeconomic consequences of the Covid-19 pandemic. Estimates suggest a median output loss of about 6.5% in 2020, a gap that is expected to narrow to around 4% of the pre-pandemic trend by the end of 2021.

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Ripple effects of monetary policy

August 6, 2021

Is conventional monetary policy transmitted through the demand for and supply of intermediate goods in an economy? Analyzing unique US data on corporate linkages, we document that downstream and upstream corporate financial health are instrumental for the transmission of monetary policy.

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Quantifying the high-frequency trading “arms race”

August 4, 2021

We use stock exchange message data to quantify the negative aspect of high-frequency trading, known as “latency arbitrage”. The key difference between message data and widely familiar limit order book data is that message data contain attempts to trade or cancel that fail.

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Humans keeping AI in check – emerging regulatory expectations in the financial sector

August 3, 2021

FSI Insights No 35, August 2021. Artificial intelligence (AI) has the potential to significantly improve the delivery of financial services. Several financial authorities have recently began developing frameworks, outlining their expectations on AI governance and use by financial institutions. These frameworks converge on common guiding principles on reliability, accountability, transparency, fairness and ethics.

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Regulating big techs in finance

August 2, 2021

BIS Bulletin No 45 – Regulating big techs in finance – Big tech firms entering financial services can scale up rapidly with user data from their existing business lines in e-commerce and social media, and by harnessing the inherent network effects in digital services. In addition to traditional policy concerns such as financial risks, consumer …

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Covid-19 and bank resilience: where do we stand?

July 22, 2021

A forward-looking view on bank resilience can be obtained through a combination of regulatory capital ratios, market valuations and insights from stress tests. Banks appear to have avoided the losses that once seemed likely given the severity of the pandemic shock, due in large part to policy support. While market valuations have largely recovered to …

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Global reflation?

July 15, 2021

Inflation has risen in many countries. In conjunction with a rebound in GDP growth and evidence of significant bottlenecks in some sectors, this has prompted concerns that the low inflation era of recent decades could be nearing its end. A closer look at the data reveals that the pickup in inflation can be ascribed largely …

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Stress-testing banks for climate change – a comparison of practices

July 14, 2021

FSI Insights No 34, July 2021. This paper discusses the challenges that emerge when trying to adapt traditional stress tests to banks’ climate-related risks. These challenges relate to: (i) data availability and reliability; (ii) the adoption of very long time horizons; (iii) uncertainty around future pathways of key reference variables covering physical risks (eg floods, …

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Fintech and the digital transformation of financial services: implications for market structure and public policy

July 13, 2021

Economic frictions such as information asymmetries and economic forces such as economies of scale and scope give rise to financial intermediaries. These frictions and forces also shape market structure. While technological advances are not new to finance, digital innovation has brought major improvements in connectivity of systems, in computing power and cost, and in newly …

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Central bank digital currencies for cross-border payments

July 9, 2021

Joint report to the G20 by the Committee on Payments and Market Infrastructures, the BIS Innovation Hub, the International Monetary Fund (IMF) and the World Bank. The report analyses how CBDCs could facilitate enhanced cross-border payments, and how practical efforts are taking these considerations forward.

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Limits of stress-test based bank regulation

July 6, 2021

Supervisory risk assessment tools, such as stress-tests, provide complementary information about bank-specific risk exposures. Recent empirical evidence, however, underscores the potential inaccuracies inherent in such assessments. We develop a model to investigate the regulatory implications of these inaccuracies. In the absence of such tools, the regulator sets the same requirement across banks. Risk assessment tools …

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Fintech and payments: regulating digital payment services and e-money

July 5, 2021

FSI Insights No 33, July 2021. This paper explores how non-bank payment service providers (NBPSPs) are regulated and provides a cross-country overview of the regulatory requirements for digital payment and e-money services offered by NBPSPs. It benefited from responses to a CPMI survey of 75 jurisdictions conducted in early 2021.

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Passive funds affect prices: evidence from the most ETF-dominated asset classes

July 2, 2021

This paper studies exchange-traded funds’ (ETFs) price impact in the most ETF dominated asset classes: volatility (VIX) and commodities. I propose a model-independent approach to replicate the VIX futures contract. This allows me to isolate a non-fundamental component in VIX futures prices that is strongly related to the rebalancing of ETFs. To understand the source …

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Distrust or speculation? the socioeconomic drivers of U.S. cryptocurrency investments

July 1, 2021

Employing representative data from the U.S. Survey of Consumer Payment Choice, we disprove the hypothesis that cryptocurrency investors are motivatedby distrust in fiat currencies or regulated finance. Compared with the general population, investors show no differences in their level of security concerns with either cash or commercial banking services. We find that cryptocurrency investors tend …

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Annual Economic Report 2021

June 29, 2021

The BIS describes how the strong policy response to Covid-19 delivered a faster than expected economic rebound, but notes that the uneven recovery creates daunting challenges for policymakers. The report also addresses rising income and wealth inequality, and lays out design choices for central bank digital currencies.

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Annual Report 2020/21

June 29, 2021

The BIS Annual Report explains what we do and who we are as an institution. You can find a description of our activities, governance and organisation, together with our annual financial statements for 2020/21.

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CBDCs beyond borders: results from a survey of central banks

June 11, 2021

Central bank digital currencies (CBDCs) could ease current frictions in cross-border payments – and particularly so if central banks factor an international dimension into CBDC design from the outset. Based on a survey of 50 central banks in the first quarter of 2021, this paper explores initial thinking on the cross-border use of CBDCs.

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