Global liquidity: where do we stand? Speech by Jaime Caruana, General Manager of the Bank for International Settlements, prepared for the Bank of Korea International Conference 2013 on “Assessing global liquidity in a global framework”, Seoul, 4 June 2013. “Global financial conditions show strong cross-currents and merit policymakers’ attention. In countries at the centre of the global financial crisis, deleveraging has lagged. In contrast, some advanced and emerging market economies show ongoing leveraging that in some cases is posing late financial-cycle risks. Global international bank credit shows little growth, but this aggregate conceals shrinkage of bank credit in Europe and its expansion in Asia. Aggregates that include credit extended in booming bond markets, like dollar credit outside the United States and euro credit outside of the euro area, are growing at double-digit rates With regard to recommendations, first, the private sector in the countries hardest hit by the global financial crisis needs to redouble its efforts to deleverage and repair its balance sheets, and policymakers in those countries need to enact far-reaching reforms. This would also allow central banks to normalise monetary policy in a manner consistent with a return to sustainable and balanced growth. Second, economies that have had credit booms and face late-cycle risks should not only sustain the macroprudential policies adopted to date but also implement policies to build up financial resilience. Third, policymakers need to strengthen prudential policies that anticipate and counter the challenges of the inevitable and desirable normalisation of global interest rates.”