ZURICH: The Financial Stability Board (FSB) has reported that the “shadow banking” has increased to about $80 trillion in 2014.
According to the report, the shadow banking activities grew by $2 trillion across 2014 on a broad measure, representing some 80 percent of global GDP and 90 percent of global financial system assets.
The FSB, an international body that monitors and makes recommendations about the global financial system to the G20, was set up six years ago after the implosion of Lehman Brothers and publishes annual reports into the parallel banking system under its remit to promote internationally transparent financial stability.
Shadow banking involves credit intermediation outside traditional banking, including hedge and investment funds.
The Switzerland-based body, chaired by Mark Carney, governor of the Bank of England, is also tasked with identifying potential weak points in the global financial system.
The FSB said it has devised a monitoring framework to track shadow banking developments to enable the identification of systemic risks, “initiating corrective actions where necessary.”
The organisation said this year it has added a more narrowly-focused “economic function” overview of shadow banking for its annual monitoring of the non-bank financial sector in order to devise policy responses aimed at risk mitigation.
