Shadow banking up in 2016, says FSB
05 March 2018 London
Image: Shutterstock
The value of the global ‘shadow banking’ market increased by 7.6 percent in 2016 to $45.2 trillion, according to the Financial Stability Board (FSB) Global Shadow Banking Monitoring Report 2017.
According to the report, which was released today (5 March) the $45.2 trillion figure represents 13 percent of the total financial system assets of the 29 covered jurisdictions, which represent 80 percent of the world’s GDP.
The report now includes Luxembourg for the first time, bringing the total number of jurisdictions to 29.
Also for the first time, the report assesses the involvement of non-bank financial entities in China in credit intermediation that may pose financial stability risks from shadow banking.
China and Luxembourg contributed $7 trillion and $3.2 trillion, respectively, to the $45.2 trillion figure.
The report is FSB’s seventh annual monitoring exercise to assess global trends and risks from shadow banking activities and reflects data up to the end of 2016.
Mark Carney, chair of the FSB and governor of the Bank of England, commented: “The sustained growth in non-bank financial activity highlights the value of the FSB’s shadow banking monitoring in allowing authorities to track and understand developments.”
“Market-based finance provides increasingly critical alternatives to bank lending in the financing of economic growth, and it is vital that resilience of the sector is maintained as it continues to evolve.”
“A close understanding of emerging risks helps guide our judgement on appropriate policy responses, such as the FSB’s 2017 recommendations to address structural vulnerabilities from asset management activities which will be operationalised this year.”
According to the FSB, the global monitoring of developments in the shadow banking system is part of its strategy to “transform shadow banking into resilient market-based finance”.
“The monitoring exercise adopts an activity-based approach, focusing on those parts of the non-bank financial sector that perform economic functions which may give rise to financial stability risks from financial banking.”
According to the report, which was released today (5 March) the $45.2 trillion figure represents 13 percent of the total financial system assets of the 29 covered jurisdictions, which represent 80 percent of the world’s GDP.
The report now includes Luxembourg for the first time, bringing the total number of jurisdictions to 29.
Also for the first time, the report assesses the involvement of non-bank financial entities in China in credit intermediation that may pose financial stability risks from shadow banking.
China and Luxembourg contributed $7 trillion and $3.2 trillion, respectively, to the $45.2 trillion figure.
The report is FSB’s seventh annual monitoring exercise to assess global trends and risks from shadow banking activities and reflects data up to the end of 2016.
Mark Carney, chair of the FSB and governor of the Bank of England, commented: “The sustained growth in non-bank financial activity highlights the value of the FSB’s shadow banking monitoring in allowing authorities to track and understand developments.”
“Market-based finance provides increasingly critical alternatives to bank lending in the financing of economic growth, and it is vital that resilience of the sector is maintained as it continues to evolve.”
“A close understanding of emerging risks helps guide our judgement on appropriate policy responses, such as the FSB’s 2017 recommendations to address structural vulnerabilities from asset management activities which will be operationalised this year.”
According to the FSB, the global monitoring of developments in the shadow banking system is part of its strategy to “transform shadow banking into resilient market-based finance”.
“The monitoring exercise adopts an activity-based approach, focusing on those parts of the non-bank financial sector that perform economic functions which may give rise to financial stability risks from financial banking.”
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