The BIS Annual Economic Report 2025 highlights the growing interconnectedness of the global financial system and the central role of trust in maintaining its stability. It identifies two major structural changes since the Great Financial Crisis: the increasing dominance of sovereign bonds over private sector credit and the expanding role of non-bank financial institutions. These changes are tied to the interconnected dynamics of financial conditions, portfolio flows and FX swaps, which facilitate cross-border investments but also amplify the transmission of financial shocks. The report further explores how trust underpins the monetary system, emphasising the critical role of central banks in ensuring the stability of money and markets. It examines how tokenisation could enhance trust by integrating central bank money, deposits and government bonds, while safeguarding the system’s resilience and integrity.
