The Switzerland-based Bank of International Settlements is owned by 63 central banks of countries that together account for about 95 percent of world GD.
Global negative-yielding debt jumped to $17.5 trillion in 2020, on a par with all-time highs, pushing investors into riskier assets as they searched for yield, widening in turn the range of low- or negative-yielding assets.
The Covid-19 pandemic and its associated economic impacts was the major driver, the Bank of International Settlements (BIS) revealed in its quarterly review report.
The Switzerland-based BIS is owned by 63 central banks of countries that together account for about 95 percent of world GDP.
On emerging markets economies (EMEs), the report said that sentiment towards such economies’ fixed income markets improved after the US election, adding that portfolio inflows into funds investing in dollar-denominated fixed income assets from EMEs, except China, continued to gain traction.
It added that their year-to-date cumulative amount turned positive again in September, and approached pre-pandemic outbreak levels towards the end of the review period.
Local currency EME funds, except China, booked modest inflows in November. But the corresponding year-to-date cumulative portfolio flows remained deeply in the negative, said the report.
Further, EME yields remained stable in both local currency and dollar-denominated segments, driven by improved sentiment and EME central banks’ accommodative monetary policy, which built upon the global easing environment and soft inflation numbers. Yields took a step down in the wake of the US election.
On central banks’ digital currency (CBDC), the report expected that it could become a new tool of payment amid ongoing challenges.