Interconnectedness among global systemically important banks (GSIBs) and global systemically important insurers (GSIIs) has important financial stability implications. This talk discusses connectedness among United States, European and Asian GSIBs and GSIIs. It shows that total system connectedness tends to rise during financial stress, coupled with strong regional clusters. Economic policy uncertainty and global long-term interest rates are important drivers of total system connectedness, while bank profitability and asset quality are found to be determinants of bank-specific return connectedness. These findings call for closer monitoring and supervision of cross-border and cross-sectoral spillover risks.
