Unpacking international banks' deposit funding

Bryan Hardy and Sonya Zhu

BIS Quarterly Review, 2023

Abstract: This feature examines international banks' deposit funding – traditional deposits, repos and interbank lending. We lay out a framework to interpret the observed evolution in the level and composition of this funding. Netting out interbank lending and abstracting from the effect of central bank quantitative tightening, we find that during the banking turmoil in the first quarter of 2023 the source of banks' deposit funding rotated from the non-financial sector to non-bank financial institutions. This rotation was material in a handful of jurisdictions. In particular, residents of Switzerland moved deposits from international banks located there to domestically oriented banks. Dollar funding of banks in the United States shifted to money market funds, which then increased their (repo) dollar funding of non-US banks.

JEL-codes: E44 E51 E58 (search for similar items in EconPapers)
Date: 2023
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