Are non-banks shrinking worldwide?

“Banks continued to be net recipients of funding from the NBFI sector, although this funding has been decreasing since 2013. In contrast, some NBFI entities’ use of funding from banks has increased,” the FSB said in its annual update on the NBFI sector.

“Enhancements in this year’s report reduced unspecified linkages across all non-bank entity types and were most notable in the case of pension funds, where identified linkages increased 25 to 30 percentage points with regard to both claims and liabilities.”

The FBS’s “narrower” measure of NBFI also decreased by 2.9% to $63.1 trillion in 2022. The watchdog attributed the shrinkage to collective “investment vehicles susceptible to runs”.

According to the report, regulators have begun to look into whether assets held outside the banking sector properly reflect interest rates.

Have thoughts about this story? Let us know in the comments below.