Gian Maria Milesi-Ferretti
Global cross-border assets and liabilities rose between the end of 2022 and the end of 2023 in nominal U.S. dollar terms and as a share of global GDP. Figure 1 shows this increase for global cross-border assets, dividing countries into three groups: financial centers, advanced economies, and emerging and developing economies. Financial centers are economies for which international financial intermediation (as opposed to end-use of funds) is the main cross-border financial activity. They include large economies such as the United Kingdom, the Netherlands, Switzerland, and Ireland, as well as smaller financial centers such as Luxembourg, Bermuda, and the Cayman Islands.
The main factor driving the aggregate increase was the rebound in global stock prices, after their sharp fall in 2022. The stock market rally boosted the valuation of global portfolio equity assets, more than offsetting the persistent weakness in global financial flows, which weighed on the nominal increase in cross-border holdings, and above-trend global inflation, which raised global nominal GDP.
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