February 04, 2019

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
News

IASB Issues Work Plan and Meeting Updates for May 2019

IASB published an updated work plan, along with the update of its meeting in May 2019.

May 17, 2019 WebPage Regulatory News
News

FCA Publishes Its Business Plan for the Coming Year

FCA published its Business Plan, which sets out the main areas of focus and priorities for 2019/20.

May 17, 2019 WebPage Regulatory News
News

CFTC Proposes to Amend Derivatives Clearing Organization Regulations

CFTC proposed amendments to certain regulations applicable to registered derivatives clearing organizations (DCOs) under Part 30 of the CFTC regulations.

May 16, 2019 WebPage Regulatory News
News

APRA Licenses Societe Generale As Foreign Deposit-Taking Institution

APRA granted Societe Generale a license to operate as a foreign authorized deposit-taking institution under the Banking Act of 1959.

May 16, 2019 WebPage Regulatory News
News

EBA Provides Updates on Its Work on Basel III Impact Assessment in EU

EBA is working to finalize the impact assessment on implementation of Basel III standards, in response to the EC call for advice, which was received on May 04, 2018.

May 16, 2019 WebPage Regulatory News
News

ISDA Publishes Two Consultations on Benchmark Fallbacks

ISDA published two consultations on benchmark fallbacks, the comment periods for which expire on July 12, 2019.

May 16, 2019 WebPage Regulatory News
News

Sam Woods of PRA Speaks About Style of Regulation in UK After Brexit

Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of PRA, spoke at the UBS Financial Institutions Conference in Lausanne.

May 16, 2019 WebPage Regulatory News
News

FED Publishes Report Summarizing Regulatory and Supervisory Activities

FED published a report that summarizes banking conditions and the supervisory and regulatory activities of FED, in conjunction with semiannual testimony before Congress by the Vice Chairman for Supervision.

May 15, 2019 WebPage Regulatory News
News

US Agencies Propose to Amend Regulatory Framework for Foreign Banks

US Agencies (OCC, FED, and FDIC) proposed a regulatory framework for foreign banks operating in the U.S. that would more closely match the rules for foreign banks with the risks they pose to the U.S. financial system.

May 15, 2019 WebPage Regulatory News
News

ECB Consults on EONIA to €STR Legal Action Plan

ECB published a consultation, which was launched by the working group on euro risk-free rates, on recommendations to address the legal implications for new and legacy contracts referencing the euro overnight index average (EONIA), as a result of the proposed transition from EONIA to the euro short-term rate (€STR).

May 15, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3089