On 16 December 2020, the Financial Stability Board published its latest global monitoring report on non-bank financial intermediation.
The report presents the results of the annual FSB monitoring exercise to assess global trends and risks in non-bank financial intermediation (NBFI), covering 29 jurisdictions that account for 80% of global GDP. The annual monitoring exercise focuses particularly on those parts of NBFI that may pose bank-like financial stability risks and/or regulatory arbitrage. As it is based on annual data, the main part of the report discusses trends in the NBFI sector globally before the onset of the COVID-19 pandemic in early 2020. The report notes that the NBFI sector – comprising mainly pension funds, insurance corporations and other financial intermediaries – has grown faster than the banking sector over the past decade, including in 2019. The financial assets of the NBFI sector amounted to $200.2 trillion in 2019, accounting for nearly half of the global financial system in 2019, up from 42% in 2008. Key amongst the drivers of growth of NBFI was the expansion of collective investment vehicles such as hedge funds, money market funds and other investment funds. The assets of this diverse range of entities grew by an annual average rate of 11% between 2013 and 2019 to make up 31% of the NBFI sector, reflecting both sizeable inflows and valuation gains.