The Monetary Stability Board (FSB) on Wednesday pitched suggestions for governments to scale back dangers round hedge funds, insurers and different non-bank monetary intermediaries, which now account for nearly half of world monetary belongings.
The sector of non-bank monetary intermediation has grown by round 130% between 2009 and 2023, making markets extra weak for stress occasions, in response to the Basel-based FSB, which acts because the G20’s monetary danger watchdog.
“This development comes with a rise in complexity and interconnectedness within the monetary system, which, if not correctly managed, can pose substantial dangers to monetary stability,” mentioned FSB Secretary Normal John Schindler.
In its session report, the FSB proposed member governments and establishments improve their give attention to non-banks and guarantee they handle their credit score dangers adequately.
One set of suggestions requires the creation of home frameworks to determine and monitor monetary stability dangers associated to non-bank leverage.
One other group proposes that coverage measures be chosen, designed and calibrated by governments to mitigate the recognized monetary stability dangers.
A 3rd group offers with counterparty credit score danger administration, calling for a well timed and thorough implementation of the Basel Committee on Banking Supervision’s revised pointers.
The FSB additionally proposed stepping up non-public disclosure practices within the non-bank sector and addressing any regulatory inconsistencies by adopting the precept of “similar danger, similar regulatory remedy.”
A final advice requires improved cross-border cooperation and collaboration.
With the session report, the FSB is inviting feedback from member governments and establishments on its coverage suggestions.
A closing report is deliberate for launch in mid-2025.
(Reporting by Ariane Luthi; modifying by Dave Graham)
