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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

Bank failure management in the European banking union: What’s wrong and how to fix it

5 days ago

FSI Papers
 | 
09 July 2020

by 
Fernando Restoy,
Rastko Vrbaski and
Ruth Walters

PDF full text (443kb)
 | 
27 pages

The European banking union’s current framework for bank failure management does not guarantee that bank failures can be handled without significant support from taxpayers. Reform efforts should focus on the inefficiency of current options for dealing with the failures of small and medium-sized banks and on the inconsistencies between national insolvency regimes and the EU resolution framework. Some benefits could be gained by facilitating greater use of

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Targeted revisions to the credit valuation adjustment risk framework

6 days ago

Summary of document history  

Previous version
Previousconsultation
This version
Subsequentconsultation
Subsequentversion

Basel III: Finalising post-crisis reforms

7 Dec 2017

Type:  Standards

Status:  Consolidated

Credit Valuation Adjustment risk – targeted revisions

28 Nov 2019

Type:  Consultative

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Implications of financial market development for financial stability in emerging market economies

7 days ago

Note submitted to the G20 International Financial Architecture Working Group

BIS Other
 | 
07 July 2020

by 
Philip Wooldridge

PDF full text (176kb)
 | 
13 pages

The development of financial markets in emerging market economies (EMEs) has strengthened EMEs’ overall resilience to swings in capital flows and exchange rates. That said, the events of March 2020 demonstrated that financial conditions are still vulnerable to feedback loops between capital flows, exchange rates and asset prices.

About the author

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The Matthew effect and modern finance: on the nexus between wealth inequality, financial development and financial technology

8 days ago

BIS Working Papers
 | 
No 871
 | 
06 July 2020

by 
Jon Frost,
Leonardo Gambacorta and
Romina Gambacorta

PDF full text (4,993kb)
 | 
51 pages

Focus
In the social sciences, the idea of the well endowed receiving further privilege, eg the rich getting richer, is often called the "Matthew effect" (New Testament Book of Matthew, 25:29). In economics, this effect is relevant particularly for wealth inequality. The effect could be amplified by financial development and technological advances that give investors access to better financial services or to

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Eighteenth progress report on adoption of the Basel regulatory framework

8 days ago

Summary of document history  

Previous version
Previousconsultation
This version
Subsequentconsultation
Subsequentversion

Seventeenth progress report on adoption of the Basel regulatory framework

16 Oct 2019

Type:  Implementation reports

Status:  Superseded

This version

BCBS
 | 

Implementation reports

 | 
06 July 2020
 |

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International spillovers of forward guidance shocks

12 days ago

BIS Working Papers
 | 
No 870
 | 
03 July 2020

by 
Callum Jones,
Mariano Kulish and
Daniel Rees

PDF full text (1,600kb)
 | 
56 pages

Focus
Central banks whose policy rates have reached their effective lower bound have turned to unconventional policies, including forward guidance, to stimulate their economies. These policies have international ramifications. We explore how forward guidance policy in large economies, such as the United States, affects smaller economies, such as Canada.
Contribution
We propose a novel definition of forward guidance

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Sound management of risks related to money laundering and financing of terrorism: revisions to supervisory cooperation

12 days ago

Summary of document history  

Previous version
Previousconsultation
This version
Subsequentconsultation
Subsequentversion

Sound management of risks related to money laundering and financing of terrorism

7 Jun 2017

Type:  Guidelines

Status:  Superseded

Introduction of guidelines on interaction and cooperation between prudential and AML/CFT supervision

8

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Corporate credit markets after the initial pandemic shock

13 days ago

BIS Bulletin
 | 
No 26
 | 
01 July 2020

by 
Sirio Aramonte and
Fernando Avalos

PDF full text (659kb)
 | 
9 pages

Key takeaways
Corporate funding markets partially resumed after seizing up in mid-March 2020 – but at much higher spreads and with sharper sectoral differentiation.
In March, wide spreads for highly rated energy firms pointed to significant downgrade risk.
Post-GFC leverage build-up amplified the damaging effects of financial stress during the pandemic.
 The unusually broad impact of the pandemic shock on lower-rated firms threatens CLO

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Annual Report 2019/20

14 days ago

The BIS Annual Report explains what we do and who we are as an institution.

BIS Annual Report
 | 
30 June 2020

PDF full text (11,045kb)
 | 
206 pages

Foreword by the General Manager

A year in review

Here you can find a description of our activities, governance and organisation, together with our annual financial statements for 2019/20.

Looking forward and back
In the period 2019/20, we continued to

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Investors’ risk attitudes in the pandemic and the stock market: new evidence based on internet searches

18 days ago

BIS Bulletin
 | 
No 25
 | 
26 June 2020

by 
Marlene Amstad,
Giulio Cornelli,
Leonardo Gambacorta and
Dora Xia

PDF full text (701kb)
 | 
9 pages

Key takeaways
The sharp drop and subsequent rebound in global stock markets in the current pandemic focuses attention on changes in investors’ risk attitudes. 
A new Covid-19 risk attitude (CRA) index for 61 markets, based on internet searches in Google and Baidu, does a good job at capturing investors’ attitudes toward pandemic-related risks. 
Stock markets are more sensitive to changes in the

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Central counterparty default management auctions – Issues for consideration

19 days ago

CPMI Papers
 | 
No 192
 | 
25 June 2020

PDF full text (466kb)
 | 
32 pages

Central counterparties (CCPs) have become increasingly critical components of the financial system in recent years, due in part to the introduction of mandatory clearing for standardised OTC derivatives in some jurisdictions. Consistent with the key responsibility of guaranteeing the fulfilment of transactions to their clearing participants, CCPs play an important role in mitigating contagion in the event of a participant default. A default management auction is one of the tools that a CCP may use

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Annual Economic Report 2020

20 days ago

A chapter on Central banks and payments in the digital era was pre-released on 24 June; the full Annual Economic Report and the Annual Report will be released on 30 June.

BIS Annual Economic Report
 | 
24 June 2020

24 Jun 2020
 | 
Video
Watch the video (00:02:08) with Hyun Song Shin on Central banks and payments in the digital era

24 Jun 2020
 | 
Podcast
Listen to the podcast (00:10:49) with Hyun Song Shin

Annual Economic Report 2020 by chapter

III.

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Capital treatment of securitisations of non-performing loans

21 days ago

Summary of document history  

Previous version
Previousconsultation
This version
Subsequentconsultation
Subsequentversion

Revisions to the securitisation framework

11 Jul 2016

Type:  Standards

Status:  Consolidated

This version

BCBS
 | 

Consultative

 | 
23 June 2020
 | 

Status:  Open
[Upload comments]

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Trade credit, trade finance, and the Covid-19 Crisis

25 days ago

BIS Bulletin
 | 
No 24
 | 
19 June 2020

by 
Frederic Boissay,
Nikhil Patel and
Hyun Song Shin

PDF full text (689kb)
 | 
9 pages

Key takeaways
As the Covid-19 pandemic hits economic activity, the vulnerabilities of longer and more geographically extended trade credit chains are coming to the fore, especially those related to international trade.
While risk mitigation is available from financial intermediaries, the bulk of the exposures associated with supply chains is borne by the participating firms themselves, through inter-firm credit.
Given

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US dollar funding: an international perspective

26 days ago

Report prepared by a Working Group chaired by Sally Davies (Board of Governors of the Federal Reserve System) and Christopher Kent (Reserve Bank of Australia)

CGFS Papers
 | 
No 65
 | 
18 June 2020

PDF full text (3,617kb)
 | 
87 pages

The US dollar dominates international finance as a funding and investment currency. Although the United States accounts for one quarter of global economic activity, around half of all cross-border bank loans and international debt securities are denominated in US dollars. Deep and liquid US dollar markets are attractive

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The fiscal response to the Covid-19 crisis in advanced and emerging market economies

27 days ago

BIS Bulletin
 | 
No 23
 | 
17 June 2020

by 
Enrique Alberola-Ila,
Yavuz Arslan,
Gong Cheng and
Richhild Moessner

PDF full text (695kb)
 | 
9 pages

Key takeaways
The fiscal policy response to the Covid-19 crisis has been swift and strong, in tandem with monetary policy. Advanced economies (AEs) have deployed a much larger fiscal response than emerging market economies (EMEs).
The lower incidence of the pandemic in EMEs does not fully explain the difference. A narrower fiscal policy space in EMEs, further reduced by the tightening of their

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How are household finances holding up against the Covid-19 shock?

29 days ago

BIS Bulletin
 | 
No 22
 | 
15 June 2020

by 
Anna Zabai

PDF full text (656kb)
 | 
9 pages

Key takeaways
As incomes shrink because of the Covid-19 shock, households must balance repaying debt with keeping up reasonable levels of consumption. 
In several countries, low- and middle-wealth households have insufficient liquid buffers to weather a long spell of unemployment without falling behind on debt repayments. 
The resilience of middle-wealth households is especially important: they hold relatively more (mortgage) debt and are more vulnerable in the

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How well-anchored are long-term inflation expectations?

June 8, 2020

BIS Working Papers
 | 
No 869
 | 
08 June 2020

by 
Richhild Moessner and
Előd Takáts

PDF full text (589kb)
 | 
35 pages

Focus
We investigate how stable long-term inflation expectations were in the 1996-2019 period. Stable, well anchored long-term inflation expectations imply that the public believes the central bank can achieve its target. Yet, inflation ran below the targeted level in many countries for a long time. Furthermore, many central banks have hit the effective lower bound for interest rates and cannot lower them further.
Contribution
Our

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Central banks’ response to Covid-19 in advanced economies

June 5, 2020

BIS Bulletin
 | 
No 21
 | 
05 June 2020

by 
Paolo Cavallino and
Fiorella De Fiore

PDF full text (820kb)
 | 
9 pages

Key takeaways
Central banks in advanced economies reacted swiftly and forcefully to the Covid-19 pandemic, deploying the full range of crisis tools within weeks. The initial response focused primarily on easing financial stress and ensuring a smooth flow of credit to the private non-financial sector.The pandemic triggered complementary responses from monetary and fiscal authorities. Fiscal backstops and loan guarantees supported central

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The Basel Framework: frequently asked questions

June 5, 2020

Summary of document history  

Previous version
Previousconsultation
This version
Subsequentconsultation
Subsequentversion

This version

BCBS
 | 

FAQs

 | 
05 June 2020
 | 

Status:  Current

PDF full text (174kb)
 | 
8 pages

Topics:
Definition of capital,
Market risk,
Operational risk

To help promote consistent interpretation of the framework the Basel Committee periodically publishes the answers to frequently asked questions (FAQs). This document sets out a number of FAQs that

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Debt De-risking

June 4, 2020

BIS Working Papers
 | 
No 868
 | 
04 June 2020

by 
Jannic Cutura,
Gianpaolo Parise and
Andreas Schrimpf

PDF full text (4,001kb)
 | 
44 pages

Focus
We examine how corporate bond fund managers manipulate the risk of their portfolios in response to competitive pressure. How bond funds react to the pressures of competition and investor redemptions is important, given the sector’s strong growth over the past few years. Corporate bond funds also matter from the standpoint of financial stability, because the funds allow their shareholders to pull out

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The effectiveness of macroprudential policies and capital controls against volatile capital inflows

June 2, 2020

BIS Working Papers
 | 
No 867
 | 
02 June 2020

by 
Jon Frost,
Hiro Ito and
René van Stralen

PDF full text (633kb)
 | 
32 pages

Focus
Countries around the world use macroprudential policies and capital restrictions as a policy response to volatile capital inflows. This paper asks: are these policies effective in reducing or changing the composition of gross capital inflows, the probability of capital inflow surges, and the probability of currency and banking crises?
Contribution
The authors assess the effectiveness of policies with a model that

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Central bank bond purchases in emerging market economies

June 2, 2020

BIS Bulletin
 | 
No 20
 | 
02 June 2020

by 
Yavuz Arslan,
Mathias Drehmann and
Boris Hofmann

PDF full text (673kb)
 | 
9 pages

Key takeaways
In response to the Covid-19 shock, many central banks in emerging market economies have launched local currency bond purchase programmes to address bond market dislocations, signalling that they were willing to take the role of a buyer of last resort.
Local currency bond yields fell significantly following the programme announcements, with little effect on exchange rates. These positive initial market

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Payment holidays in the age of Covid: implications for loan valuations, market trust and financial stability

May 28, 2020

FSI Briefs
 | 
No 8
 | 
28 May 2020

by 
Rodrigo Coelho and
Raihan Zamil

PDF full text (307kb)
 | 
10 pages

Highlights
Governments and banks have introduced payment deferral programmes to support borrowers affected by Covid-19. But deferred payments are not forgiven and must be repaid in the future, raising prospective risks to the banking system. Thus, they should be designed to balance near-term economic relief benefits with longer-term financial stability considerations.
The Basel Committee on Banking Supervision (BCBS) and several prudential

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Model risk at central counterparties: Is skin-in-the-game a game changer?

May 25, 2020

BIS Working Papers
 | 
No 866
 | 
25 May 2020

by 
Wenqian Huang and
Előd Takáts

PDF full text (241kb)
 | 
28 pages

Focus
We investigate how central counterparties (CCPs) manage counterparty credit risks. CCPs play a key role in clearing derivative trades. They stand between clearing members, insuring them against counterparty credit risks. To manage these risks, CCPs ask their clearing members for collateral, ie initial margin. Model risk arises when a CCP underestimates potential credit losses in its initial margin model. If model risk were to

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Dealing with Covid-19: understanding the policy choices

May 22, 2020

BIS Bulletin
 | 
No 19
 | 
22 May 2020

by 

Frederic Boissay,

Daniel Rees and

Phurichai Rungcharoenkitkul

PDF full text (744kb)
 | 
9 pages

Key takeaways
Containment policies save lives but restrict economic activity. Standard approaches to accounting for the value of human lives lend support to these policies despite their high short-term economic costs.

Integrated epidemic-macroeconomic models provide a coherent framework for quantifying the costs and benefits of containment policies. Part of the benefit comes from limiting

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EME bond portfolio flows and long-term interest rates during the Covid-19 pandemic

May 20, 2020

BIS Bulletin
 | 
No 18
 | 
20 May 2020

by 

Peter Hördahl and

Ilhyock Shim

PDF full text (808kb)
 | 
9 pages

Key takeaways
Bond portfolio outflows from emerging market economies (EMEs) are typically associated with currency depreciation and rising domestic long-term interest rates. This relationship asserted itself in a particularly stark way during the Covid-19 crisis in mid-March 2020.
The relationship between bond portfolio outflows and long-term rates varies across EMEs, depending on factors such as bond market depth, FX market functioning and

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The drivers of cyber risk

May 20, 2020

BIS Working Papers
 | 
No 865
 | 
20 May 2020

by 

Iñaki Aldasoro,

Leonardo Gambacorta,

Paolo Giudici and

Thomas Leach

PDF full text (684kb)
 | 
45 pages

Focus
Information technology (IT) has become indispensable, underpinning economic growth over the past decades. As organisations of all sizes in both the public and private sector become ever more interconnected and reliant on IT products and services such as cloud-based systems and artificial intelligence, they are increasingly exposed to cyber risks – the risk of financial loss,

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