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International Financial Markets as Viewed from BIS Statistics:Changes in the International Flow of Funds in the 1990s

  • The full text can be obtained from the August 1999 issue of the Quarterly Bulletin.

August 31, 1999
Bank of Japan

Click on ron9908a.pdf (206KB) to download the full text.

Introduction

The volume of international capital flows has surged since the 1980s, in line with the progress of globalization in financial markets. For example, the gross international capital flows of the G-7 countries1 as a percentage of GDP remained around 2-3 percent from the 1970s through the mid-1980s, but then briskly accelerated and has recently been above the 10 percent level. It is estimated that, if international risk transfers employing derivatives trading are also included, the volume of international capital flows and risk transfers is growing exponentially. Given these developments, an accurate understanding of the international capital flows and risk transfers is becoming essential to the consideration of each country's macroeconomic and financial system and the stable development of the global economy and financial system. While various types of information are required for this purpose, these may be broadly divided into information on the volume and the pricing of international capital flows and risk transfers. In recent years, there has been a growing recognition of the necessity for comprehensive analyses of international financial markets that cover both categories of information, and the importance of such analyses will continue to increase in the future.

Based on this understanding, the central banks of the major countries and the Bank for International Settlements (BIS) have been compiling statistics on the volume of international financial transactions with the cooperation of the authorities and financial institutions concerned, and have been making further efforts to improve these statistics following the currency and financial crises in emerging economies that began in mid-1997. In addition to cooperating in the compilation of international financial statistics centered around the BIS, the Bank of Japan is releasing these statistics pertaining to Japan on its own initiative.

This paper is designed to promote greater understanding of the BIS statistics by presenting an outline of these statistics on international financial markets, examining how the effects of important international financial developments in recent years - including the decline in the credit standing of Japanese banks, the currency and financial crises in emerging economies, and the introduction of the euro - are reflected in these statistics, and indicating the types of analyses that are feasible using these statistics. This paper also briefly outlines the ongoing efforts to improve the BIS statistics.

  1. The G-7 countries are Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.