Basel: Shadow Banking Moderates in 2018

Bank-like activity by nonbanks that poses financial stability risks grew by 1.7% to total $50.9 trillion in 2018, according to the Basel, Switzerland-based Financial Stability Board today—down significantly from the annual growth figure observed between 2012 and 2017 of 8.5%. The measure, which represents 13.6% of global financial assets, comprises collective investment vehicles, nonbank lenders dependent on short-term funding and market intermediaries depending on short-term or secured funding.

A subset of all nonbank financial activity, the measure is designed to replace the term “shadow banking,” which the FSB now calls “nonbank financial intermediation” as part of its multiyear project monitoring risks posed by nonbanks. In 2018, depository institutions’ share of global financial assets rose by 2.8%, while the annual growth rate of other major financial sectors slowed or held steady.