Foreword to the BIS Annual Report 2021/22 by the BIS General Manager

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I am pleased to present the BIS's Annual Report for 2021/22. The report highlights the progress we have made to support central banks' pursuit of monetary and financial stability, and the steps we have taken to live our values, to deliver on our Innovation BIS 2025 strategy and to respond to the new challenges we face.

Over the past financial year, member central banks confronted a number of additional challenges in an already highly complex policy environment. In most countries, the acute phase of the Covid-19 pandemic appears to have passed; however, its effects still reverberate. The relaxation of containment measures in much of the world, in conjunction with substantial monetary and fiscal policy stimulus, has resulted in a rapid growth rebound. At the same time, the demand rotation from services to goods that occurred early in the pandemic has not fully reversed and aggregate supply has proven less responsive than pre-pandemic. This combination has led to significant bottlenecks in global supply chains and resulted in higher than expected inflation. The war in Ukraine has not only created unimaginable hardship for its people, but has further exacerbated uncertainty and strained production networks, especially in the energy and agriculture sectors.

For the first time in years, many central banks now face the challenge of taming high inflation. While some inflationary pressures should ease as demand patterns normalise and new supply comes on line, the timing and path to that correction is uncertain, and central banks face difficult choices in the period ahead. Restoring low inflation must be the priority.

At the same time, central banks need to be attuned to changes in the financial and economic landscape post-pandemic, not least from emerging financial stability risks and payment system innovations. Our economic analysis over the year looked in-depth at the implications of these challenges for the global economy and the central bank community.

The continuing need for international dialogue and cooperation underscores our role as the global forum for central banks. Regular meetings held in the context of the Basel Process fostered exchanges of views and experiences on topics including the uneven post-pandemic recovery, the impact of war, the interactions of monetary policy and fiscal policy, and building cyber resilience.

The BIS-hosted committees made major inroads on macro-financial stability policy frameworks, sustainable finance and cross-border payments.

In addition to the regular meetings, our Representative Offices broadened their engagement across their respective regions, publishing targeted research, shaping policy debates in Asia and the Americas, and bringing insights from central banks back to the BIS. The relevance of our outreach to central banks and supervisory authorities is further supported by the Financial Stability Institute, which completed projects this year to advance international cooperation in financial technology and crisis management.

From a banking perspective, 2021/22 was challenging but successful. Despite ongoing Covid-19-related constraints and market volatility, net profits reached SDR 341.0 million by end-March – lower than the previous year's exceptional SDR 1,237.3 million, but a good performance under the circumstances. Meanwhile, total comprehensive income was SDR 918.1 million. Development of new customer products helped us to maintain a high level of customer placements and third-party assets, including adding another green bond fund to our suite of products.

In 2021/22, we passed the halfway point in the overall timeline of our Innovation BIS 2025 strategy and have now delivered on around 60% of its goals. In 2022, the BIS Innovation Hub saw a new phase of expansion, with the opening of its London and Nordic Hub Centres, and made excellent progress on projects that address priority areas in central banks' innovation agendas. We also leveraged technology to use data more effectively and enhance our customer services. And beyond these outward-facing efforts, we improved processes to facilitate our operations and enhance the day-to-day experience of our staff.

I was particularly pleased that in 2021/22, we were finally able to mark the Bank's 90th anniversary with our BIS 90 Years exhibition and open our doors to the public. It represented an opportunity for us to welcome the local community in order to reflect on where we have been, showcase our role in the global financial system and, most importantly, look to the future.

In December 2021, we bid farewell to the Chair of our Board of Directors, Jens Weidmann, as he concluded his time at the Deutsche Bundesbank, and extended our thanks to him for his excellent service to the BIS. In January 2022, we welcomed our new Board Chair, François Villeroy de Galhau, Governor of the Bank of France.

Looking back at these achievements over the past year, I must warmly thank our people, without whom none of this would have been possible and who consistently go the extra mile to anticipate and respond to the needs of central banks during these challenging times.

Agustín Carstens