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Unpacking international banks' deposit funding

Author

Listed:
  • Bryan Hardy
  • Sonya Zhu

Abstract

This feature examines international banks' deposit funding – traditional deposits, repos and interbank lending. We lay out a framework to interpret the observed evolution in the level and composition of this funding. Netting out interbank lending and abstracting from the effect of central bank quantitative tightening, we find that during the banking turmoil in the first quarter of 2023 the source of banks' deposit funding rotated from the non-financial sector to non-bank financial institutions. This rotation was material in a handful of jurisdictions. In particular, residents of Switzerland moved deposits from international banks located there to domestically oriented banks. Dollar funding of banks in the United States shifted to money market funds, which then increased their (repo) dollar funding of non-US banks.

Suggested Citation

  • Bryan Hardy & Sonya Zhu, 2023. "Unpacking international banks' deposit funding," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:2309d
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    References listed on IDEAS

    as
    1. Iñaki Aldasoro & Wenqian Huang & Esti Kemp, 2020. "Cross-border links between banks and non-bank financial institutions," BIS Quarterly Review, Bank for International Settlements, September.
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    3. Franceschi, Emanuele & Grodzicki, Maciej & Kagerer, Benedikt & Kaufmann, Christoph & Lenoci, Francesca & Mingarelli, Luca & Pancaro, Cosimo & Senner, Richard, 2023. "Key linkages between banks and the non-bank financial sector," Financial Stability Review, European Central Bank, vol. 1.
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    More about this item

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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