We would like to thank Domenico Giannone, Cédric Tille, Tim Pohlmann and Tommaso Trani for very fruitful discussions and valuable comments. We would also like to thank

This policy brief documents recent trends in international fi nancial fl ows, based on a newly assembled dataset covering 40 advanced and emerging countries. Specifi cally, we compare the period since 2012 with the pre-crisis period and highlight four key stylized facts. First, the "Great Retrenchment" that took place during the crisis has proved very persistent, and world fi nancial fl ows are now down to half their pre-crisis levels. Second, this fall can predominantly be related to advanced economies, especially those in Western Europe, while emerging markets, except Eastern European countries, have been less severely affected until recently. Third, the global patterns of net fl ows have also recorded signifi cant changes. Overall, net fl ows have fallen substantially relative to the years preceding the sudden stop, which is to some extent an expression of the changes registered in the current account. Fourth, not all types of fl ows have shown the same degree of resilience, resulting in a profound change in the composition of international fi nancial fl ows: while banking fl ows, which used to account for the largest share of the total before 2008, have collapsed, FDI fl ows have been barely affected and now represent roughly 45% of global fl ows. Portfolio fl ows stand between these two extremes, and within them equity fl ows have proved more robust than debt fl ows, which should help to strengthen resilience and deliver genuine cross-border risk-sharing. Having highlighted these stylized facts, this policy brief turns to possible explanations for and likely implications of these changes, regarding international fi nancial stability issues.

No abstract

and CAED for helpful comments and discussions. Special thanks to the team of the Searle Center on Law, Regulation, and Economic Growth, Northwestern University, for helping us with the data. The views expressed in this paper are those of the authors and do not reflect those of the Banque de France and the Bank of Canada.

In this paper we provide empirical evidence on the impact of US and UK monetary policy changes on credit supply of banks operating in Italy and France over the period 2000-2015, exploring the existence of an international bank lending channel. Exploiting bank balance sheet heterogeneity, we find that monetary policy tightening abroad leads to a reduction of credit supply at home, in particular for US monetary policy changes. Our results show that USD funding plays an important role in the transmission mechanism, especially for French banks which rely to a larger extent on USD funding. We also show that banks adjust their euro and foreign currency lending differently, thus implying that funding sources in different currencies are not perfect substitutes. This is especially the case when tensions in currency swap markets are high, thus resulting in costly cross-currency funding.