BIS holds Annual General Meeting and releases its 73rd Annual Report

"The global economy lost steam in the course of last year despite significant policy stimulus," said the Bank for International Settlements (BIS) in its Annual Report, released today. While the financial sector proved generally resilient, developments in the geopolitical, economic and financial spheres held back growth and led to great uncertainty about the future.

Nout Wellink, President of the Bank, addressed representatives of more than 100 central banks and international institutions attending the Bank's Annual General Meeting in Basel, Switzerland. He emphasised that low inflation and the hard-earned credibility of the central banking community had allowed central banks to respond vigorously to underpin global demand. It had meanwhile become clear, however, that the recent slowdown had been unusual compared to typical business fluctuations in the postwar period.

Looking forward, Wellink saw encouraging signs, including a moderation of oil prices and growing confidence in financial markets that policy easing would prove effective. At the same time a number of risks remained. Markets might still be too optimistic about future profitability; housing prices could weaken at some point; consumer spending might fail to hold up; and global current account imbalances might not be reabsorbed smoothly. Should some of these risks materialise, policymakers might find themselves navigating in unfamiliar waters. "So the time ahead might put a premium on the need for cooperation between monetary, fiscal and, in some cases, prudential authorities," said Wellink.

Malcolm Knight, BIS General Manager, reported on the Bank's activities, highlighting its expanded outreach as well as new products and services, such as plans to manage the new Asian Bond Fund on behalf of Southeast Asian central banks. He described the Bank's initiatives to enhance transparency, with the SDR adopted as its unit of account, and accounting practices revised to present a better overview of its financial operations. He praised the care, energy and wide consultation devoted to development of the New Basel Capital Accord, and underscored the Bank's contribution to promoting monetary and financial stability by facilitating close cooperation among central banks, the Basel-based committees and other groupings of financial authorities.

The Bank reported a balance sheet totalling 92.8 billion gold francs (GF) at 31 March 2003, and a net profit of GF 362.0 million (GF 1 = USD 1.94149).

The Annual Report and Nout Wellink's speech are available in English, French, German, Italian and Spanish on the BIS website (www.bis.org), or on request from publications@bis.org.