"For all the turmoil and anxiety, both market functioning and financial intermediation more generally proved resilient," the head of the BIS' Monetary and Economic Department, Claudio Borio, said in the umbrella group's latest quarterly report. "The post-crisis regulatory reforms aimed at strengthening financial institutions are bearing fruit." Last week's 10.4% crash in world stocks was the worst since the depths of the global financial crisis in 2008 and sent investors scrambling for the guaranteed income of ultra-safe government bonds.

Emerging market assets, where the BIS has been warning of a build up in debt in recent years, had a correction although it has proved relatively muted thus far. The wider rout also came less than two weeks after world stocks had hit record highs, fuelling expectations that the US Federal Reserve, European Central Bank, Bank of Japan and other central banks around the world would cut interest rates again.

"Now uncertainty rules globally," Borio said. "The official community is monitoring developments closely. Where do we go from here? One thing is sure: financial markets will continue to dance to the tune of news about the virus, and of the authorities' response.

Copyright Reuters, 2020