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The COVID-19 shock infected the euro area’s financial markets, causing races for liquidity and sell-offs of even safe assets, including sovereign bonds. The European Central Bank stepped in decisively to avert further damage by implementing sound monetary policies, demonstrating the importance of being prepared before a new crisis unfolds.
<ul> <li>New BIS analysis of the <a href="https://www.bis.org/statistics/rpfx22.htm"><span class="firstword">2022</span> Triennial Central Bank Survey</a> shows shifts in trading patterns and market structure in foreign exchange and over-the-counter interest rate derivatives markets, identifying risks deserving attention.</li> <li>Foreign exchange swap positions point to over $80 trillion of hidden US dollar debt, reported off-balance sheet. </li> <li>T...
<ul> <li> <p><span>Non-bank financial intermediaries (NBFIs) have grown significantly. Their activities can amplify market stress and undermine financial stability.</span></p> </li> <li> <p><span>A macroprudential regulatory approach is needed to address the structural vulnerabilities in NBFIs, most notably liquidity mismatches and hidden leverage.</span></p> </li> <li> <p><span>Concerns about a new virus variant late in the per...
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
Markets Wrestle With Reflation Prospects: BIS Quarterly Review Date 01/03/2021 Prospects of a more robust economic recovery buoyed risky asset prices, with signs of exuberance reflected in the behaviour of retail investors. Sovereign yield curves steepened as investors priced in higher inflation and fiscal support. Sentiment towards emerging market assets remained favourable, in particular in East Asia. The latest BIS Quarterly Review reports that risky assets strengthened further during the review period.1 This buoyancy was set against a backdrop of continued strong monetary accommod...