BIS Annual Report 2018/19 Promoting global monetary and financial stability Annual Report Annual Report In that light, to prepare ourselves for the new opportunities ahead we launched our new medium-term strategy, Innovation BIS 2025. Developed with strong support and input from our stakeholders, it means the following changes in our three main areas of activity: • Our economic analysis and research will broaden in focus to include new themes and respond to the current and foreseeable challenges facing the central bank community and the financial services industry. We will focus work on the implications of technological innovation for central banks, the financial system and the economy at large; monetary policy frameworks in advanced and emerging market economies; and the evaluation of post-crisis financial reforms. • As a global forum for cooperation among central banks and other financial authorities, we will continue our strong support for the Basel Process and develop new channels of collaboration and knowledge-sharing. • Our role as the “bank for central banks” requires our banking business to continue to excel, calling for investment in next- generation technologies. We aim to expand our range of financial products and services, extend our global operational Foreword by the presence with the establishment of a new dealing room in the Americas, and upgrade our IT environment to more effectively BIS General Manager support our activities. Innovation BIS 2025 was launched in the context of a prolific year. It is my great pleasure to present the Annual Report 2018/19 of Our research output in 2018/19 garnered much attention. the Bank for International Settlements. The report looks back at a productive year in which we strove to provide excellent Our banking activities also had a solid year. Thanks to increased service to the central bank community and also launched a new competitiveness, average customer deposits over the 2018/19 strategy to shape the Bank for the future. financial year increased above the Bank’s SDR 200 billion target level, the highest value since 2009. Total assets rose to Ten years after the peak of the Great Financial Crisis, we are SDR 291.1 billion by end-March 2019, up 13% from the previous now in a good position to reassess how we are fulfilling our year’s level, with net profits at SDR 461 million. Leveraging the mission in the light of new challenges. regional market expertise of the Representative Office for Asia and the Pacific, new money market and tradable instruments in At the BIS, we provide support and value added to the offshore renminbi (CNH) have been added to the product range, central bank community, promote monetary and financial and business in onshore renminbi (CNY) products expanded. stability, and foster international cooperation in those areas, while continuing to ensure the Bank’s financial strength and During the year we also celebrated two 20th anniversaries, of the independence. Asian Office and of the Financial Stability Institute. Special events marked both occasions – a reaffirmation of our commitment to In the current context, our challenges have grown. The post- our global stakeholders. crisis environment poses policy issues, as central banks rethink their monetary policy strategies. Technological innovation is As this Annual Report shows, our activities in the past year affecting the financial sector and the economy as the digital already reflected the spirit of continuous innovation that we are revolution gathers pace. And the ever changing macroeconomic cultivating – paving the way for the new strategy. and financial environment, increased competition and evolving stakeholder needs have given rise to business pressures. Agustín Carstens Annual Report Contents 1 Innovation BIS 2025 7 2 The global bank for central banks 11 3 Promoting global monetary and financial stability 15 Economic research, analysis and statistics 17 Banking activities 29 Financial Stability Institute 37 Representative Offices 41 Representative Office for Asia and the Pacific 41 Representative Office for the Americas 44 4 Promoting international cooperation 47 The Basel Process 48 Governors’ meetings 48 Other regular gatherings 49 BIS committees 53 Basel Committee on Banking Supervision 54 Committee on Payments and Market Infrastructures 57 Committee on the Global Financial System 60 Markets Committee 62 Central Bank Governance Group 63 Irving Fisher Committee on Central Bank Statistics 64 International associations at the BIS 65 Other areas of international cooperation 67 5 Financial results and profit allocation 69 Balance sheet 70 Financial performance 72 Allocation and distribution of profit 74 6 Governance and organisation 77 General Meetings 78 BIS member central banks 78 Board of Directors 80 BIS Management 85 Organisation 86 Staff 88 Communications and outreach 92 7 Financial statements 95 Annual Report Annual Report 1 In the year under review, we launched Innovation BIS 2025, our new medium-term strategy. It comprises a set of initiatives that positions the Bank for the challenges ahead. It aims to build a stronger BIS that embraces continuous innovation on both the analytical and business fronts, at the same time as it considers best practices at the organisation-wide level. 6 7 Annual Report Annual Report Maintain a strong Engage with central Establish new Deepen our global engagement with banks in the channels of engagement, Innovation BIS 2025 is motivated BIS committees and innovation space knowledge-sharing including hosted associations through a new among central through our two by our constant commitment to in the context of the multidisciplinary banks in cyber representative excel in our work. It is designed Basel Process (see hub to explore security practices offices in the Asia- to position the Bank to tackle page 48) the practical (see page 51) Pacific region and implications of new in the Americas (see new business challenges in technological trends page 41) the post-Great Financial Crisis Broaden our Enhance our Financial Stability financial environment and economic analysis and research to Develop capabilities Institute’s work in respond to the evolving needs of International cooperation include new themes in advanced capacity-building central banks and other financial (eg the economic, analytics (eg big and knowledge- financial and data) and new online sharing, especially authorities amid rapid economic In our role as a forum for policy implications tools for external in technology- and technological changes. international cooperation and of technological collaboration, related topics and knowledge-sharing, we will develop innovation; including for the financial crisis compilation and management, to Innovation BIS 2025 consists on multiple fronts. monetary policy frameworks in dissemination help supervisory of a set of initiatives that is advanced and of international authorities address anchored by our mission: to emerging market statistics (see ongoing and page 21) new supervisory provide support and value economies) (see page 24) challenges (see added to central banks in their page 37) pursuit of monetary and financial stability, to foster international cooperation in those areas, and to act as a bank for central Improve the risk- Expand our range Implement an Review and upgrade banks. return profile of of products and updated financial the technology our investments, services, including risk management environment both in terms of establishing a new framework to allow supporting our It is a strategic effort that funds from our dealing room in us to maintain our banking services encompasses not only the Banking services customers and our our Representative prudent investment substance of our activities own capital Office for the approach while In relation to our financial operations Americas diversifying the way but also the way in which we we use capital in an and the banking services we offer to accomplish them. efficient manner central banks, we have plans in four key areas (see page 29). Our ultimate aim is to build a forward-thinking and dynamic BIS that uses its resources effectively to continuously deliver added value to our stakeholders. Invest in next- Align our people Improve the way we generation strategy and work, emphasising Some of our work in the past technology to build human resources dynamism, year already pointed in the Organisation-wide a resilient and management efficiency and direction of Innovation BIS 2025. future-ready digital policies and individual initiatives workplace for the practices with the accountability As the new initiatives bear fruit in organisation as a evolving needs of the coming years, we will share To enable all front-line business units whole the organisation the outcomes in future Annual to work effectively and in line with the strategy’s ultimate goals, we will have Reports. major undertakings in three areas. 8 9 Annual Report Annual Report 2 The global bank for central banks As a hub for central banks and other financial regulatory and supervisory authorities across the globe, the BIS is in a unique position to respond to their needs. It does this through its work in three main areas: economic research and analysis, banking services and international cooperation. 10 11 Annual Report Annual Report The Bank for International Settlements (BIS) is an international organisation headquartered in Basel, Switzerland. It is owned by 60 member central banks and monetary authorities from around the world. Conducting economic