Shadow banking on the up, says FSB
11 May 2017 London
Image: Shutterstock
The value of the global ‘shadow banking’ market increased in 2015 to now stand at $34 trillion, according to the Financial Stability Board (FSB).
The Global Shadow Banking Monitoring Report 2016, released this week, revealed that the alternative financing market was equivalent to 13 percent of total financial system assets and 70 percent of the GDP of 28 covered jurisdictions.
The report is the FSB’s sixth annual study aimed at assessing global trends and risks in the shadow banking system, reflecting data up to the end of 2015.
There were a number of firsts in the 2016 report, including the addition of data from Belgium and the Cayman Islands, bringing the total number of jurisdictions to 28.
Another new feature of this report was the collection of data to measure interconnectedness among the bank and the non-bank financial sectors to assess the trends of short-term wholesale funding, including repos.
The FSB clarified repeatedly during its analysis that data availability needs to be improved. It did highlight that, on an aggregated basis, both banks’ credit exposures to and funding from ‘other financial intermediaries’ have continued to decline in 2015, although they remain above the levels before the financial crisis.
Mark Carney, chair of the FSB, said in his letter to the G20 finance ministers and central bank governors ahead of their Baden-Baden meeting that in completing the work under the Shadow Banking Roadmap, “the FSB has not identified new shadow banking risks that currently require additional regulatory action at global level".
“However, given that new forms of shadow banking activities are certain to develop in the future, FSB member authorities must maintain and continue to invest in an effective and ongoing programme of surveillance, data sharing and analysis so as to support judgements on any required regulatory response in the future.”
The Global Shadow Banking Monitoring Report 2016, released this week, revealed that the alternative financing market was equivalent to 13 percent of total financial system assets and 70 percent of the GDP of 28 covered jurisdictions.
The report is the FSB’s sixth annual study aimed at assessing global trends and risks in the shadow banking system, reflecting data up to the end of 2015.
There were a number of firsts in the 2016 report, including the addition of data from Belgium and the Cayman Islands, bringing the total number of jurisdictions to 28.
Another new feature of this report was the collection of data to measure interconnectedness among the bank and the non-bank financial sectors to assess the trends of short-term wholesale funding, including repos.
The FSB clarified repeatedly during its analysis that data availability needs to be improved. It did highlight that, on an aggregated basis, both banks’ credit exposures to and funding from ‘other financial intermediaries’ have continued to decline in 2015, although they remain above the levels before the financial crisis.
Mark Carney, chair of the FSB, said in his letter to the G20 finance ministers and central bank governors ahead of their Baden-Baden meeting that in completing the work under the Shadow Banking Roadmap, “the FSB has not identified new shadow banking risks that currently require additional regulatory action at global level".
“However, given that new forms of shadow banking activities are certain to develop in the future, FSB member authorities must maintain and continue to invest in an effective and ongoing programme of surveillance, data sharing and analysis so as to support judgements on any required regulatory response in the future.”
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