BIS Warns of Turn in Credit Markets

Bloomberg: Funding Slowdown May Signal Turning Point in Liquidity, BIS Says
A decline in international financing may signal the beginning of a tightening in global credit markets, according to the Bank of International Settlements.

Outstanding debt securities fell the most in three years, with repayments surpassing new issuance by $47 billion in the fourth quarter, the Basel, Switzerland-based institution said in a report published Sunday that cited drops in a raft of measures of international financing. The decline in outstanding debt was driven by weak issuance by financial companies in developed economies.
On Friday the Federal Reserve took steps to exacerbate this trend: Fed Proposes Rules to Boost Stability of Financial System
The Federal Reserve has put forward new rules aimed at addressing one of the primary causes of the 2008 financial crisis — the financial exposures that the biggest banks had with each other.

The Fed is proposing new limits on that exposure. It hopes the new rules will prevent the type of crisis that engulfed the U.S. financial system in September 2008 when the collapse of Lehman Brothers raised fears about the stability of other banks that had made loans to Lehman.

The central bank on Friday approved by unanimous vote putting the new rules out for a 90-day comment period.
The Fed's timing is atrocious.

The BIS report looked at China. No surprises, but for those not paying attention over the past couple of years, economic activity is declining. The amount of cross border claims is falling and as I've shown before, RMB deposits in Hong Kong are falling and savers increasingly favor demand deposits. Chinese firms are also borrowing fewer USD.
Decreasing cross border activity in China. The Federal Reserve wants to reduce links between big banks in the U.S. And Europe and the UK are nationalizing their banking systems.
Reuters: Barclays to exit Africa in 'transatlantic' makeover
Barclays Plc will sell its Africa business as part of a plan by new Chief Executive Jes Staley to simplify the bank's structure and seek higher shareholder returns, after reporting a 2 percent profit drop and slashing its dividend.
Bloomberg: Barclays's Africa Choice to Depend on Capital, Ex-Director Says

Back to China and other emerging markes: BIS Quarterly Review March 2016 – media briefing
Debt was at the root of the financial crisis, and it has risen further globally in relation to GDP since then (see graph). In the advanced economies at the heart of the crisis, some private sector deleveraging has taken place, although public sector debt has grown steadily. But the most worrying development has been the steep rise in private sector debt elsewhere, especially in several emerging market economies (EMEs), including the largest – the main engines of global growth post-crisis. The increase has been strongest among corporates, whose profitability has been declining, and among commodity exporters. Often, as indicated by our latest statistical release, this has gone hand in hand with strong property price booms on the back of aggressive risk-taking – all eerily reminiscent of the financial booms seen pre-crisis in the economies subsequently hit by it.

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