Camilla Jessen
The Bank for International Settlements (BIS) has issued a stark warning.
The Bank for International Settlements (BIS), often called the “central bank of central banks,” has issued a strong warning about the global economy, calling the current period one of major uncertainty and vulnerability.
A New Era of Instability
Agustin Carstens, BIS General Manager, said in the institution’s annual report released Sunday that the world is entering “a new era of uncertainty and unpredictability.”
He noted that trust in institutions, including central banks, is under pressure, and that long-standing international economic structures are being tested by recent political shifts.
“The U.S.-led trade war and other policy changes are undermining the global economic order that has existed for decades,” Carstens stated.
His comments come as the world awaits the July 9 deadline set by President Donald Trump for the potential implementation of new U.S. trade tariffs.
Global System Growing Weaker
The BIS report highlights growing trade fragmentation and protectionism as key risks. These trends are adding pressure to already slowing global growth and falling productivity.
Other threats include population aging, climate change, ongoing geopolitical conflicts, and disruptions to supply chains.
Carstens also warned that high public debt levels limit how governments can respond to economic shocks. He pointed to rising global military spending as another source of financial risk.
“This trend cannot continue,” he said firmly.
U.S. Dollar Under Pressure
Hyun Song Shin, the BIS’s chief economist, pointed out that the U.S. dollar has fallen around 10% in value since the start of the year—its steepest six-month drop since the 1970s.
But Shin said this does not yet signal a broad pullback from U.S. assets by international investors, but rather reflects hedging behavior in uncertain times.
Record Revenue, Strong Deposits
Despite global concerns, the BIS reported a net profit of 843.7 million Special Drawing Rights (about $1.2 billion), with revenue reaching a record SDR 3.4 billion (about $5.3 billion).
The BIS also saw foreign currency deposits hit an all-time high.
Carstens emphasized the importance of maintaining the institution’s financial strength and credibility:
“It is essential that the BIS maintains the highest degree of credibility and financial soundness,” he said, as he prepares to step down from his leadership role.
