BIS Reviews Efforts To Strengthen International Financial System
Following a Bank of International Settlements meeting in March, members have focused on a review of potential vulnerabilities in the international financial system, and progress that has been made in addressing weaknesses in market foundations. Members reviewed the global macroeconomic situation and developments affecting financial markets, observing that it is premature to evaluate the ramifications of the war in Iraq on the macroeconomic outlook and the outlook for financial markets. Furthermore, the group considered various underlying sources of economic and financial strength and weakness. An important element has been developments in corporate and household sector balance sheets and the sensitivity of those balance sheets to changes in interest rates and exchange rates. Members reviewed a number of financial factors that could be important to the economic outlook, including volatility in equity markets, various strains affecting some parts of the banking and insurance sectors, and credit risk transfer activity. In addition, the consortium examined the ongoing adjustment in emerging market economies and their improving access to international capital markets.