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Cross-border credit sees largest increase since Covid pandemic

Created at 12 Aug · 3:36 AM1 source↑ Market-relevant
IN SHORT

Cross-border bank credit surged by $1.7 trillion in the first quarter, marking the most significant rise since the onset of the Covid-19 pandemic. Non-bank financial institutions (NBFIs) were the primary drivers of this increase.

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Key Numbers

$1.7 trillionincrease in cross-border bank credit
$650.6 billioncredit increase to NBFIs

Who's Involved

Bank for International Settlements (BIS)
provider of latest data on cross-border credit
Non-bank financial institutions (NBFIs)
sector with largest increase in credit

↳ Why This Matters

The significant increase in cross-border credit, particularly to non-bank financial institutions, indicates a potential shift in global financial flows and could signal increased risk-taking or a search for yield in the international financial system.

Key facts

  • Cross-border bank credit rose by $1.7 trillion in the first quarter.
  • This is the largest increase observed since the Covid-19 pandemic.
  • Non-bank financial institutions (NBFIs) accounted for the largest share of this increase.
  • Credit to NBFIs reached $650.6 billion.

Cross-border bank credit experienced its most substantial increase since the beginning of the Covid-19 pandemic in the first quarter, growing by $1.7 trillion. According to data from the Bank for International Settlements (BIS), non-bank financial institutions (NBFIs) were the primary contributors to this surge. Credit extended to NBFIs rose by $650.6 billion, marking the second-highest figure recorded for this sector.

Frequently asked questions

The BIS is an international financial institution that acts as a bank for central banks, promoting international monetary and financial cooperation and serving as a stable asset for its members.

NBFIs are financial intermediaries that offer services similar to traditional banks but are not subject to the same regulatory oversight. Examples include hedge funds, private equity firms, and money market funds.

A large increase in cross-border credit can indicate increased global economic activity, but it can also signal rising financial risks, especially if it is concentrated in less regulated sectors like NBFIs.

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How It Developed

Cross-border bank credit increased by $1.7 trillion in the first quarter.
This represents the largest rise since the Covid-19 pandemic began.
Non-bank financial institutions (NBFIs) saw the largest increase in credit.
Credit to NBFIs rose to $650.6 billion.

Sources

T1
Cross-border credit posts biggest rise since CovidRisk.net

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