The Bank for International Settlements (BIS) has warned of a “pivotal moment” in the world economy, citing rising tensions and trade wars that are eroding public trust in institutions. The BIS, which represents central banks worldwide, says the US-driven trade war is fraying the global economic order.
According to outgoing BIS head AgustÃn Carstens, the global economy is entering a “new era of heightened uncertainty and unpredictability.” This is testing public trust in central banks, including the Federal Reserve, which has faced criticism from President Trump over its handling of inflation.
The BIS report highlights several concerns, including rising protectionism and trade fragmentation, which are exacerbating decades-long decline in economic growth. The organization also warns that the world economy is becoming less resilient to shocks due to factors like population aging, climate change, geopolitics, and supply chain issues.
High public debt levels are increasing the financial system’s vulnerability to interest rates, while a sharp fall in the dollar could further fuel inflation. However, non-US investors’ “hedging” behavior appears to have made a significant contribution to the dollar’s decline over the past few months.
The BIS has published several reports on the growing threat of stablecoins and warns that it is too early to determine whether this represents a shift away from US assets. Meanwhile, the BIS itself reported a net profit of $1.2 billion and a record high in comprehensive income of $5.3 billion, highlighting its financial stability.
Source: https://nypost.com/2025/06/29/business/world-economy-faces-pivotal-moment-central-bank-body-bis-says