The Bank for International Settlements, the Basel-based central bankers' bank, isn't ready to call an end to financial globalization.
Data on cross-border banking suggest that a pullback started during the global financial crisis in 2007-2009 and has set in since: cross-border claims reported by banks in more than 40 jurisdictions declined from a peak of 60 percent of global GDP in 2007 to less than 40 percent since 2013.
BIS argues that those figures give a false signal, since a regional quirk is driving what looks like an aggregate trend.
"Banks headquartered in Europe accounted for more than all of the global decline — that is, these banks' foreign claims declined by more than $9 trillion," while those of U.S. banks and banks from other advanced countries and emerging market economies grew, according to the bank's annual report.
Given the European banks' circumstances, the shrinkage is better interpreted as cyclical de-leveraging than as a structural trend away from globalization, they write.