The BIS released its Quarterly Review covering an overview of recent developments in financial markets, before turning in more detail to highlights from the latest BIS data on international banking and financial market activity. It also includes a special feature article on tracking capital flows in the international banking markets.
In the international debt securities market, gross issuance was robust at $1.1 trillion in the third quarter of 2006, even as net issuance of bonds and notes slowed more than normal seasonal patterns would have suggested, to $506 billion. The United Kingdom was one of the few developed countries to see strong growth in net bond and note issuance.
In the international banking market, the total stock of cross-border claims of BIS reporting banks increased by 15% year-on-year in the second quarter of 2006 to $24 trillion. The pace of expansion was more modest than in previous quarters, amidst decelerating growth in the claims of banks in the euro area and the United Kingdom.
The consolidated banking statistics show an expansion of foreign claims in the second quarter of 2006, largely driven by Dutch, French and German banks.
The special feature on international bank flows highlights the network of bilateral linkages between international banking centres or particular regions, and go on to analyse the net flow of bank credit between ultimate lenders and borrowers.
The authors show that an increasingly significant amount of these flows is channelled through banks in international banking centres such as the United Kingdom, and in Asian and Caribbean offshore centres. They also document the extent to which regional external positions, as captured by current account balances, covary with financing flows through the international banking system.
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© Graham Bishop
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