BIS global liquidity indicators at end-September 2019

• US dollar credit to non-bank borrowers outside the United States grew by 5% year on year at end-September 2019, to reach $12.1 trillion.
• Euro-denominated credit outside the euro area continued to expand at a fast pace (9%). In contrast, the growth rate of yen-denominated credit outside Japan fell to 1%.
• Strong debt securities issuance drove expansions in US dollar and euro credit to emerging market and developing economies (EMDEs). US dollar credit to EMDEs grew at an annual rate of 3% (to reach $3.8 trillion); euro credit to EMDEs expanded by 9% (to reach €0.7 trillion).

Euro-denominated credit outside the euro area continued to expand rapidly

Graph 1: Annual percentage change of US dollar-, euro- and yen-denominated credit to non-resident non-banks (interactive graph).
Source: BIS global liquidity indicators (Table E2.1, E2.2 and E2.3).

US dollar credit to non-bank borrowers outside the United States grew by 5% year on year (yoy) (Graph 1, red line) to reach $12.1 trillion at end-September 2019. In terms of the main components, the growth rate of bank loans (6% yoy) exceeded that of debt securities (4% yoy) for a third consecutive quarter. This represents a notable reversal of the pattern observed during most of the post-Great Financial Crisis period, when US dollar debt securities outpaced loans.

Euro-denominated credit to borrowers outside the euro area grew by 9% yoy (Graph 1, blue line), pushing the outstanding stock up to €3.5 trillion (equivalent to $3.8 trillion) at end-September 2019. Meanwhile, the yoy growth rate of yen-denominated credit outside Japan fell sharply to 1% (yellow line). This took the outstanding stock to ¥48.6 trillion (equivalent to $0.5 trillion).

Debt securities drove growth in foreign currency credit to EMDEs

Graph 2: Annual percentage change of US dollar- and euro-denominated credit to non-banks located in EMDEs (interactive graph for USD and EUR).
Source: BIS global liquidity indicators Table E2.1 and Table E2.2.

The yoy growth rate of US dollar credit to residents of EMDEs rose slightly, to 3%, as of end-September 2019 (Graph 2, solid red line). This was driven by international debt securities, which grew at 9% yoy (dotted red line). By contrast, dollar-denominated bank loans to EMDEs contracted by 2% yoy. Since the start of 2015, the yoy growth rate of dollar loans to EMDEs has been negative in 13 (out of 19) quarters.

Differences across EMDE regions remained substantial. At one extreme, dollar credit to Africa and the Middle East continued to expand very rapidly (by 13% yoy at end-September, up from 11% at end-June). At the other extreme, dollar credit to emerging Europe continued to contract, albeit at a slightly slower pace (-8% as of end-September) than at end-June (-9%). Between those two extremes, credit to Latin America and the Caribbean grew at 3% yoy while that to emerging Asia remained flat.

Euro-denominated credit to EMDEs rose at an annual rate of 9% as of end-September 2019 (solid blue line). As with dollar credit, the expansion was driven by international debt securities, which grew by 16% yoy (dotted blue line). The annual growth rate of bank loans dipped to 5% at end-September 2019, down from an average of 9% over the five years up to end-September 2018.