Global trade in goods is contracting, manufacturing investment is weak across the world and global supply chains are unravelling. Yet finance seems relatively untouched by the US-China trade tensions — immune, even, from the overwhelming pressures of deglobalisation. This counter-intuitive development cries out for explanation.

To say there has been no deglobalisation in financial markets risks oversimplification. According to a study by McKinsey Global Institute, global cross-border capital flows shrank from a peak before the financial crisis of $12.4tn in 2007 to $4.3tn in 2016. Yet the decline was almost exclusively in bank lending, notably in the interbank market. Eurozone banks alone account for half of the contraction.

These banks’ response to the crisis was to scale back often unprofitable and risky foreign operations, reduce lending and shed assets in their efforts to restore their capital ratios. But this was more a case of cyclical deleveraging than a broad-based deglobalisation, argue economists at the Bank for International Settlements.