BISness Media briefing on the BIS Quarterly Review, December 2025
Dec 12, 2025
Hyun Song Shin, Economic Advisor at the Bank for International Settlements, leads a discussion joined by Gaston Gelos and Frank Smets. They delve into the December 2025 BIS Quarterly Review, highlighting market volatility and rising FX turnover. Shin explains how US short-term rates impact hedging strategies and examines gold's unusual rise alongside equities. The trio also discusses the implications of emerging market derivatives growth and private credit defaults, raising concerns about market fragility amidst speculative behaviors. Watch out for insights on AI investment and the dollar's future!
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Stretched Valuations And Elevated Volatility
- Global markets showed high valuations and elevated volatility within the review period.
- Hyun Song Shin warns stretched risky-asset valuations raise questions about consequences if sentiment turns.
Higher US Rates Raised Hedging Costs
- BIS triannual survey shows FX and interest rate derivatives are central to global finance and hedging.
- Shin notes higher US short-term rates raised hedging costs, reducing hedge ratios and amplifying exposures during April volatility.
FX Markets Held Up During April Volatility
- Despite concerns about dealer internal liquidity pools, FX markets functioned normally in April.
- BIS finds market structure and decentralization held up during the volatility episode.