_UK and France see big upturn in overseas cash deposits
One of the critical issues we consider each year in The Wealth Report is where money is coming from – and where it’s going to. These movements help to drive both residential and commercial property market performance globally.
Using data collected by the Bank for International Settlements (BIS), we are able to offer a unique overview of money flows. The Common Reporting Standard (CRS) and, more broadly, the global drive towards greater transparency may influence their timing and direction.
In the 2018 edition of The Wealth Report, we provided an analysis of BIS data on the level of deposits from individuals, corporates and governments by location of origin. The number of locations that report to the BIS on an aggregate level has risen to 31, while those reporting on a location-by-location basis has risen to 29, helping to provide a more comprehensive overview.
Above: Sky high 101 Taipei in Taiwan, a top three destination for overseas deposits
The level of deposits held overseas around the world is increasing. The total level of cross-border deposits reported at December 2017 was US$6.4 trillion, US$632 billion higher than was reported in December 2016.
Despite the rise in political uncertainty and unknowns surrounding Brexit, the UK saw the largest inflow of overseas deposits by some margin. The level of deposits reported rose to US$1.8 trillion in December 2017, a currency-adjusted annual net inflow of US$239 billion.
The second most popular destination was France, with an annual adjusted net inflow of US$89 billion. This influx could be partly attributed to the popularity of Macron’s government at the end of 2017, restoring faith in the French economy.
However, in recent months this popularity has declined, which may be reflected in the BIS data for the first half of 2018. Taiwan maintained its position, coming in third with an annual net inflow of US$12 billion, a fact that can be attributed at least in part to its being outside the remit of the CRS.
The country that saw the largest increase of deposits held outside its borders was the US. Over the course of 2017, it was the largest origin for deposit outflows, depositing an additional US$220 billion across the reporting locations. The most popular destinations for these funds were the UK, France and Canada.
Hong Kong was also a significant source of funds, adding US$40 billion to the deposits held in other reporting locations over 2017, the biggest recipients being the UK, Macau and the US.