Skip to main content

Quantifying the risks from banks’ foreign claims

With bond yields now dropping back again, the drag from unrealised losses on banks’ capital ratios should start to reverse. However, a sharp increase in losses on banks’ foreign loan portfolio has yet to materialise. While our view that major advanced economies will only experience a mild recession suggests that there won’t be widespread defaults, the poor quality of banks’ overseas loans and their sensitivity to rising interest rates and tighter financial conditions suggest that foreign loans pose substantial risks.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services


Get access