Cross-Border Bank Credit and Global Financial Stability

11 Pages Posted: 19 Jun 2013

See all articles by Bob Hills

Bob Hills

Bank of England - International Finance Division

Glenn Hoggarth

Bank of England

Date Written: June 13, 2013

Abstract

This article looks in detail at one aspect of global liquidity: cross-border credit provided by banks. Cross-border banking can potentially have considerable benefits, especially by diversifying the available sources of lending and borrowing, and by increasing banking competition. But such flows can also amplify risks in times of stress. As this article sets out, cross-border bank lending contributed to the build-up in vulnerabilities before the recent crisis, and exacerbated the bust once the crisis hit. The article then considers possible policy responses, arguing in particular that policymakers need to ensure that they can properly monitor these flows, from the point of view of recipient countries and the global system as a whole.

Suggested Citation

Hills, Bob and Hoggarth, Glenn, Cross-Border Bank Credit and Global Financial Stability (June 13, 2013). Bank of England Quarterly Bulletin 2013 Q2, Available at SSRN: https://ssrn.com/abstract=2281113

Bob Hills (Contact Author)

Bank of England - International Finance Division ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Glenn Hoggarth

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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