Vladyslav Sushko
I’m a senior economist at the Bank for International Settlements. I joined the BIS after completing my PhD in International Economics at the University of California, Santa Cruz.
Previously, I developed forecasting models for a major credit card company, worked on consulting projects for the World Bank, and held visiting positions at the University of Tokyo and the Institute of Innovation Research at Hitotsubashi University.
Russian and Ukrainian are my mother tongues; English native-level; second-highest level proficiency certificate in Japanese.
What's New
Research
Media coverage
How the BIS overstates the risk of FX swaps
Banking Risk & Regulation
The Bank for International Settlements is concerned about foreign exchange contracts, warning last year that they amounted to huge, growing off-balance sheet dollar debts in the financial system. Fresh analysis from Risky Finance shows that the growth is concentrated in a handful of US banks, especially Citi and JPMorgan.
October 2, 2023
Central bank body BIS flags new unpredictability in interest rate markets
Reuters
The central bankers' central bank, the Bank for International Settlements, has urged investors to hunker down for an extended spell of unpredictability in global interest rates, as well as rising pressures in the financial system.
September 18, 2023
Hedge fund bets could spark turmoil in US Treasuries, BIS warns
Financial Times
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A build-up of leveraged bets has the potential to “dislocate” trading in the $25tn US Treasuries market, the umbrella group for central banks said, the latest high-profile warning over the potential for crowded hedge fund bets to sow instability.
September 18, 2023
The $28trn global reach of Asian finance
The Economist
The countries of East and South-East Asia are renowned, even envied, for reshaping global supply chains. Less well appreciated is the extent to which they have redrawn the map of global capital flows. After a buying spree over the past decade or so, the region’s ten biggest economies...
January 15, 2022
Emerging Asia needs dollar hedging reforms to reduce market risks
Reuters
TOKYO, Dec 6 (Reuters) - Asia's emerging economies should improve oversight of foreign exchange liquidity risks and make currency hedging more flexible as growing dollar investments make the region more vulnerable to currency swings, the Bank for International Settlements said...
December 6, 2021
Hedge Funds Reject Central Banker Criticism on Volatility
Bloomberg
Hedge funds are pushing back against the regulators who blame them for stoking extraordinary market volatility in March when the pandemic hit.
The Washington-based Managed Funds Association says its members lack the firepower to disrupt the $20 trillion U.S. Treasuries market...
September 22, 2020
Asia-Pacific’s Commercial Properties Battered as Investors Flee
Bloomberg
Global investors have disproportionately reduced spending on commercial real estate in Asia Pacific compared with other regions amid the pandemic and the outlook remains challenging, according to a report.
Total volume of commercial property acquisitions, including office, retail and hotels, was about 65% of the...
September 14, 2020
US Treasuries: the lessons from March’s market meltdown
Financial Times
Kevin Walter’s work-from-home experiment lasted mere hours. On March 12, the Barclays trader was so alarmed by the turbulence flaring up in the US government bond market that he jumped in a car and made a dash from his home in Connecticut to his office in the normally crowded Times Square...
July 29, 2020
The successes of the Fed’s dollar-swap lines
The Economist
The federal reserve steadfastly refuses to view itself as the world’s central bank, which is a pity, because it is becoming quite good at the job. One sign of its success is the stabilisation of the world’s reserve currency. The dollar spiked by over 8% against a basket of six other widely traded currencies...
June 20, 2020
Investors at the gates: MMF reforms fail the Covid test
Risk.net
In mid-March, as major US cities were being put on lockdown, the sponsors of some prime money market funds were desperately trying to avoid doing the same to investors. Over the course of three days, from March 18 to 20, BNY Mellon and Goldman Sachs bought $4 billion of...
June 18, 2020
US MMFs transmitted Covid-19 stress to banks – BIS research
Central Banking
Money market funds (MMFs) in the US served to channel dollar funding stresses to the banking sector during the Covid-19 shock in March and April, research by Bank for International Settlements economists finds. In the bulletin article, Egemen Eren, Andreas Schrimpf and Vladyslav Sushko find stresses in commercial paper and...
May 12, 2020
The fire in Treasurys
The Grumpy Economist
Just where was the fire that caused the Federal Reserve to buy $1.3 trillion of treasury debt in a month -- financing all treasury sales and then some? I've been puzzling about this question in a few posts, most recently here. Commenter "unknown" impolitely but usefully points me to a nice paper by...
April 29, 2020
Coronavirus crisis lays bare the risks of financial leverage, again
Financial Times
Crises reveal fragility. This one is no exception. Among other things, coronavirus has revealed fragilities in the financial system. This is unsurprising. As before, reliance on high leverage as a magical route to elevated profits has led to private profits and public bailouts. The state, in the form of central banks and governments, has come to...
April 28, 2020
Hedge-Fund Geniuses Failed Again. When Will We Learn?
Bloomberg
A few weeks ago, I recommended When Genius Failed, Roger Lowenstein’s masterly narrative of the meltdown and rescue of Long-Term Capital Management in 1998, as one of five books to read in self-isolation. It is a great read, and I suggested it because it covers a crisis that was in...
April 9, 2020
Why FX swap lines are back
Financial Times
Mathis Richtmann is the managing director of the German macro-finance think tank Dezernat Zukunft, based in Berlin. He’s also recently graduated from the London School of Economics with a thesis on the central bank swap-line network that sprung up during the 2008 financial crisis. If anyone understands the...
March 17, 2020
Electronic Market Makers Gain Share In FX
Traders Magazine
Non-bank electronic market-makers have penetrated deeply into the foreign exchange market that was exclusive to bank dealers five years ago according to the latest Bank for International Settlements’ Triennial Survey.
The BIS survey said the share of principal trading firms in spot electronic trading with buy-side clients rose to 32%, up from...
January 13, 2020
Smaller banks turn to currency derivatives for short term liquidity
Financial Times
Rapid growth in the volume of foreign exchange swaps handled in London over the past three years has been fuelled in part by smaller European banks and hedge funds using currency derivatives to fund their short-term liquidity requirements, the Bank of England said.
Demand for short-term funds meant the volume of currency swaps trading by...
December 24, 2019
Foreign Exchange Trading: 2019 Edition
Money and Banking
Every so often, new data provide us a glimpse of parts of the world that few people ever see. Last week, the BIS’s Triennial Central Bank Survey of Foreign Exchange and Over-the-counter (OTC) Derivatives Markets in 2019 provided just such a view. The headline is that average daily foreign exchange (FX) turnover, adjusted for double counting, is $6.6 trillion per day. That is, nearly 8% of...
December 16, 2019
Mystery Solved? BIS Report Studies Triennial FX Survey Data
FX Week
While foreign exchange volumes have resumed their long-term growth and soared to a record high in 2019, the market has become more complex and fragmented, and more exposed to settlement risk since the creation of CLS, contributors to the Bank for International Settlements’ (BIS) latest quarterly review say...
December 10, 2019
China’s Yuan Punches Below Its Weight
The Wall Street Journal
China’s yuan is on the rise: a future challenger to the global supremacy of the dollar, or at the very least, the herald of a new multipolar currency system—or so we’re told.
A look at the data on the actual international use of the yuan, and its achingly slow development over the past decade, is a sobering experience...
December 10, 2019
New BIS report cites “internalization” by large banks
LeapRate.com
The Bank for International Settlements (BIS) has noticed a growing trend of large bank platforms over the past three years to send less foreign exchange volume into the network for processing. A new report cites low volatility as reason that large banks in the Interbank system are “internalizing” more of their customer client capital flows...
December 10, 2019
Big FX platforms see e-trading volumes drop over past 3 years
Reuters
LONDON, Dec 9 (Reuters) - Turnover on some of the world’s biggest currency-trading venues has dropped as falling market volatility prompts some global banks to route more volumes onto their internal platforms, the Bank for International Settlements said in a quarterly report.
Electronic trading between banks on the...
December 9, 2019
Keep Your Eye On Record Large Global Derivatives Markets
Forbes
If I had a dollar for every time my clients and students told me in 2008 – 2012, that derivatives markets would collapse from the weight of new financial regulation, I would be a billionaire now. Despite regulations and new standards enacted in the Group of 20 countries beginning in 2009, global derivatives markets are larger than ever...
December 8, 2019
Danger Lurks for Currency Market If Volatility Recurs, BIS Says
Bloomberg
JPMorgan Chase & Co. is recommending a risk-on investment allocation for 2020 as the global economy gathers momentum in the wake of the slowdown of recent months.
Stocks are a common theme across the Wall Street giant’s top trades, including bets on Japanese banks, German equities and emerging markets, a note by strategists including Nikolaos Panigirtzoglou, Marko Kolanovic and...
December 8, 2019
Putting Libor Out of Its Misery Is Proving Easier Said Than Done
Bloomberg
Weaning off the scandal-plagued Libor benchmark is a gigantic problem for global rates markets, one that increasingly looks too burdensome for a single replacement to handle in the U.S.
Global regulators decided to move away from the London interbank offered rate -- a vital part of the financial system given that it’s linked to...
July 15, 2022
Banks face squeeze as Libor replacements fall short - BIS
Reuters
LONDON, March 5 (Reuters) - Replacements for the tarnished Libor interest rate benchmark could squeeze bank funding, with the costs borne by customers, the Bank for International Settlements said on Tuesday.
LONDON, March 5 (Reuters) - Replacements for the tarnished Libor interest rate benchmark could squeeze bank funding, with...
March 5, 2019
Are investors getting more risk with passive bond funds than they bargained for?
MarketWatch
Are popular exchange-traded funds and other passive mutual funds designed to track benchmark bond indexes inadvertently putting investors at risk?
The Bank for International Settlements makes the argument that so-called passively run bond funds, which track an index...
March 14, 2018
BIS says volatility funds ‘amplified’ equity turmoil in February
Financial Times
Volatility-linked funds aggravated the stock market turmoil of early February, highlighting how complex strategies can “create and amplify” outsized slumps across financial markets, according to the Bank for International Settlements.
On February 5, several “inverse Vix” exchange-traded products...
March 12, 2018
How volatility products aggravated equity correction
Capital.com
Stock markets across the globe suffered a sharp sell-off in late January and early February. While it was assumed fears of the impact of rising inflation on the pace of US rate hikes was the trigger, the sell-off was exacerbated by exchange-traded products based on volatility measures, a new report finds...
March 11, 2018
Passive Bond Funds Rewarding Debt Danger Stability, Says BIS
Bloomberg
The Bank for International Settlements sees rising debt issuance as potentially destabilizing for global markets, and points to a curious suspect -- index funds.
In a report issued Sunday, the BIS warned that borrowers may be tempted to ignore the interests of their bondholders and take on...
March 11, 2018
How ETF Popularity May Encourage Debt
The Wall Street Journal
The increasing popularity of passive funds may be leading companies to take on more debt, the Bank for International Settlements says.
New research published Sunday by the Basel-based consortium of central banks found a significant statistical relationship between firms’ weight in bond indexes and how indebted they are. Indexes are closely...
March 11, 2018
This Dollar Shortage Isn’t Likely to Last
Bloomberg
There’s a global dollar shortage. On Dec. 15, the cost of obtaining dollars using something called a cross-currency basis swap rose to its highest level since the European debt crisis of 2011.
“There’s never been a worse time to be buying Treasuries if you’re a euro-based investor,” my Bloomberg colleagues Brian Chappatta and...
Why Cross-Currency Basis Swaps Are Year-End Focu
Bloomberg
A surge in U.S. dollar borrowing costs against the euro and the yen in the closing days of 2017 has cast the spotlight on cross-currency basis swaps. The premium paid to borrow the greenback in exchange for the euro for three months surged to a six-year high, with traders offering various reasons: Year-end demand to tidy up accounts for regulatory scrutiny, or...
December 15, 2017
Forex trading ain’t what it used to be
Financial Times
Remember the glory days of currency trading?
Way back in 2013, when the Bank for International Settlements last reviewed the market’s structure, FX traders were feasting* on sweet, sweet fast-money volume around the Bank of Japan’s quantitative easing.
Ah, the memories. In the following years, we never knew if we’d wake up to...
December 15, 2016
In Japan, my kingdom for a dollar hedge
Financial Times
Japan. Yen. Negative rates. Negative cross-currency basis. A lack of dollars. An upcoming Fed MMF thing. A breakdown in covered interest parity. A collateral shortage. And no more Bake-off!
Could this be the harbinger of stranger things to come?
A good place to start is this piece from the BIS by...
September 29, 2016
The fall in interest rates: Low pressure
The Economist
THE story of rich-world central banks and their protracted entanglement with near-zero interest rates was given another twist this week. One of their number gamely announced it still hoped for a more distant relationship, even if it couldn’t bring itself to turn its back on them yet. Another renewed its vows to stick with them...
September 24, 2016
Take cover: An anomaly that shows markets are not as liquid as before
The Economist
THE most dangerous words in finance are: “This time is different.” But sometimes markets can genuinely change. After the 2007-08 financial crisis, markets are less efficient and liquid than before.
The evidence can be found in the currency markets, as a paper* in the latest quarterly bulletin from the...
September 24, 2016
Origins of Bund Tantrum Seen in Interest-Rate Swaps
Bloomberg
The rout in euro-area sovereign-bond markets in April and May that shook markets around the world may have had its roots in derivatives.
The probable cause was a rush by investors in preceding months, when securities prices were rising, to protect themselves against falling yields using swaps, according to the...
December 6, 2015
Banks Are Now Too Scared to Even Make Money
The Wall Street Journal
In early 2009 my bank gave me money for free. The post-Lehman fall in interest rates meant I could earn more from a deposit at the troubled bank then I had to pay them on my mortgage.
Such risk-free profits don’t come around very often, and are usually a sign that the financial system isn’t working properly. If $10 bills are left...
September 19, 2016
Offshore repo, capital charges and petrodollars
Financial Times
Repo expert Scott Skyrm at Wedbush warned last week that August 24 could be a date to watch because it’s a GSIB surcharge calculation day, along with July 31 and September 30.
As he stressed:
Taking that one step further, traders are even thinking about September 30 quarter‐end Repo rates...
August 25, 2015
Global finance faces $9 trillion stress test as dollar soars
The Telegraph
Sitting on the desks of central bank governors and regulators across the world is a scholarly report that spells out the vertiginous scale of global debt in US dollars, and gently hints at the horrors in store as the US Federal Reserve turns off the liquidity spigot.
This dry paper is the talk of the hedge fund village in Mayfair, and the stuff of nightmares for those...
March 11, 2015
About that $9 trillion global non-bank credit exposure
Financial Times
In one of our previous post about petrodollars, we cited BoAML on how nobody really knows how the petrodollar shadow liquidity flows through the global economy, apart from the fact that eventually they end up being repatriated to the US via investments in domestic stocks or bonds...
February 5, 2015
How Syndicated Lending Turns Small Shocks Into A Big Problem
ValueWalk
In 2007, before the financial crisis started unfolding, syndicated loans made up 40% of cross-border funding to US companies and two-thirds of cross-border funding to emerging markets, and banks rapid withdrawal from syndicated lending appears to be one of the main channels that allowed the stress to...
January 26, 2015
Warnings Grow Over Emerging Market Debt
The Wall Street Journal
A rapid build up of U.S. dollar debt in emerging economies is increasing the links between monetary policy in major economies with that in the developing world, posing a growing risk as the direction of interest rates diverge between major central banks.
Global investors have rushed to buy into an unusually large amount of U.S. dollar debt sold...
January 20, 2015
The dollar is still our currency and still your problem
Financial Times
For some reason, a lot of people outside the US like to borrow from and lend to each other in dollars.
A new paper from the Bank of International Settlements, which has consistently been producing some of the best research on these flows, describes how the action has shifted from banks to bond investors since 2008...
January 22, 2015
Rate shock could spark ‘damaging feedback loops’: BIS
CNBC
The emerging markets are at risk of “damaging feedback loops” once the world’s central banks start reining in their monetary policy and raise rates, the Bank for International Settlements (BIS) warns.
BIS, known as the central bank of central banks and one of the few organizations to foresee the global financial crisis of 2008...
September 15, 2014
Bond Losses Seen as Emerging-Market Company Debt Matches GDP
Bloomberg
Investors in emerging-market debt have become more vulnerable to interest rate and currency shocks after corporate borrowing in some nations rose to match the output of their economies, according to the Bank for International Settlements.
Borrowers from Brazil to China may need to refinance about $90 billion next year and as much as...
September 14, 2014
BIS economists find Fed's QE helps curb tail risk perception
Central Banking
A research paper by three economists at the Bank for International Settlements (BIS), published today, sets out to test the theory that unconventional monetary policy actions such as the various rounds of asset purchases by the US Federal Reserve were instrumental in curbing perceptions of tail risks in the economy. In The Response of Tail Risk...
September 5, 2013