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Friday, October 31, 2014

Financial Stability Board Reports Expansion of Shadow Banking in 2013

The Basel, Switzerland-based Financial Stability Board (FSB) reported that shadow banking—financial intermediation outside of depository institutions—grew by $5 trillion in 2013 to reach $75 trillion, according to the fourth annual Global Shadow Banking Monitoring Report. Shadow banking increased its share of total financial assets worldwide from 23.6% to 24.6%; meanwhile, depository institutions’ share fell from 46.8% to 45.6%.

The report presents data as of end-2013 from 25 jurisdictions and the euro area as a whole, covering about 80% of global GDP and 90% of global financial system assets. The FSB studies shadow banking as part of its work to identify and mitigate stability risks across the financial system.

In addition, the report found that by absolute size, advanced economies have the largest shadow banking sectors, while emerging market jurisdictions recorded the fastest growth rates—albeit from a relatively small base. “While the non-bank financial system may contribute to financial deepening, careful monitoring is still required to detect any increases in systemic risk factors (e.g. maturity and liquidity transformation, and leverage) that could arise from the rapid expansion of credit provided by the non-bank sector.”

This year, the report is accompanied for the first time by the publication of a comprehensive dataset on a jurisdiction and aggregate level.

Read more.

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