Wenqian Huang
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Cross-border links between banks and non-bank financial institutions​ (with Inaki Aldasoro and Esti Kemp)
BIS Quarterly Review - September 2020
Media coverage: Central banking

Cross-border links between banks and non-bank financial institutions (NBFIs) gained momentum in recent years. Banks' cross-border claims on NBFIs rose from $4.6 trillion in Q1 2015 to  $7.5 trillion in Q1 2020, a faster increase than that of total cross-border claims. Financial centres and large advanced economies play a prominent role, as hosts of the largest and most interconnected NBFIs such as central counterparties, hedge funds and investment funds. The size of banks' cross-border links to NBFIs in emerging market economies has also been on the rise, albeit from a low base. The financial market turmoil triggered by Covid-19 revealed several vulnerabilities associated with cross-border linkages between banks and NBFIs. 

OTC derivatives: euro exposures rise and central clearing advances​ (with Sirio Aramonte)
BIS Quarterly Review - December 2019

The composition of amounts outstanding in over-the-counter derivatives shifted towards the euro and cleared instruments. Since the Great Financial Crisis, increases in central clearing rates have helped shape growth in amounts outstanding. Derivatives subject to regulatory clearing mandates were approaching full clearing, while clearing rates were low for certain products, including some with short maturities or liquid bilateral markets. 

Clearing risk in OTC derivatives markets: the CCP-bank nexus (with Umar Faruqui and Elod Takats)
BIS Quarterly Review - December 2018
Media coverage: Financial Times, Reuters

Systemically important banks and central counterparties (CCPs) interact in highly concentrated over-the-counter (OTC) derivatives markets. We outline the CCP-bank nexus to think about the endogenous interactions between banks and CCPs in periods of stress. As these interactions could potentially lead to destabilising feedback loops, the risks of banks and CCPs should be considered jointly, rather than in isolation.

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