FSB Assesses Global Nonbank Financial Intermediation Activity for 2018
FSB published a report that presents results of the eighth annual monitoring exercise, which assesses global trends and risks from nonbank financial intermediation (NBFI) in 2018. It covers data up to the end of 2017 from 29 jurisdictions, which together represent over 80% of global GDP. With the 2018 report, FSB moves away from the term shadow banking and adopts NBFI, to emphasize the forward-looking aspect of the its work. This change in terminology does not affect either the substance or the coverage of the monitoring exercise.
The report first introduces the monitoring approach of FSB, including its scope, data, and terminology. It then describes recent innovations in NBFI and provides an overview of the size and growth of all sectors in the financial system, including central banks, banks, public financial institutions, insurance corporations, pension funds, other financial intermediaries (OFIs), and financial auxiliaries.. Next, the report assesses the interconnectedness between non-bank financial entities and banks and between non-bank financial entities and cross-border linkages. Finally, the report focuses on those parts of NBFI where bank-like financial stability risks may arise. The report also features case studies that discuss various aspects of non-bank financial entities and activities in greater detail. These include fintech credit, recent developments in the leveraged loan markets and the role of non-bank financial intermediaries, the non-bank credit cycle, cross-border movements of NBFI systems, and the use of credit default swaps by non-bank financial institutions in EU.
The main findings from the 2018 monitoring exercise include the following:
- The narrow measure of NBFI grew by 8.5% to USD 51.6 trillion in 2017, a slightly slower pace than during 2011-16.
- Collective investment vehicles with features that make them susceptible to runs continued to drive the overall growth of the narrow measure in 2017.
- Securitization-based credit intermediation increased by 9% in 2017, to account for 10% of the narrow measure, primarily driven by growth in trust company assets and securitizations.
- In 2017, the wider OFIs in aggregate, grew by 7.6% to USD 116.6 trillion in 21 jurisdictions and the euro area, growing faster than the assets of banks, insurance corporations, and pension funds. OFI assets represent 30.5% of the total global financial assets, the largest share on record. Among the OFI sub-sectors, structured finance vehicles grew in 2017 for the first time since the financial crisis.
- Investment funds and money market funds are the largest OFI sub-sectors that provide credit to banks. In aggregate, banks and OFIs have become marginally more interconnected through credit and funding relationships in 2017, remaining near the 2003-06 levels.
Related Links
Keywords: International, Banking, Insurance, Securities, NBFI, Financial Stability, Shadow Banking, Monitoring, FSB
Related Articles
BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
EBA Seeks Views on Proportionality Assessment Methodology
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
US Agencies Propose Changes to Call Reports and Instructions
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
EBA Examines Asset Encumbrance in Banking Sector
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
EBA Publishes Methodological Guide to Mystery Shopping
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
APRA Issues Update on Capital Reform Policy Settings for Banks
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
CPMI-IOSCO Assess Continuity Planning of Market Infrastructures
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
BoE Announces Changes to Validation Rules for Form BTL
The Bank of England (BoE) published questions and answers (Q&A) on OSCA to BEEDS migration for statistical reporting as well a presentation from the project overview session held with statistical reporters.
BCBS Proposes Changes to Process for Reviewing G-SIB Methodology
The Basel Committee on Banking Supervision (BCBS) is consulting on a technical amendment to the Basel Framework to reflect a new process reviewing the global systemically important bank (G-SIB) assessment methodology.
