The Bank for International Settlements issued its BIS locational banking statistics (LBS) on global liquidity indicators. The key findings of this report are as follows:
- Banks' cross-border claims fell by $1.4 trillion in Q4 2022, slowing the year-on-year (yoy) growth rate to 6%. Both lower bank credit (ie loans and holdings of debt securities) and a drop in the market value of banks' derivatives and other residual instruments contributed to the decline.
- Global cross-border bank credit (ie loans and holdings of debt securities) fell by $749 billion, or $400 billion on a seasonally adjusted basis. Euro-denominated credit declined by $231 billion after expanding earlier in the year.
- Cross-border bank credit to emerging market and developing economies (EMDEs) fell by $179 billion in Q4 2022 due to weaker dollar lending. Credit to the Asia-Pacific region contracted the most.
- The BIS global liquidity indicators (GLIs) show a large contraction in dollar credit to non-banks in EMDEs in Q4 2022. Dollar credit to EMDEs shrank by 4%, a rate last seen during the Great Financial Crisis of 2007–09.
Given the recent failures around the world of banks, largely as a result of aggressive action to contain inflation, watching this data may give insight into future policy on liquidity and capital in the future.