Progress report on implementation of reforms, agreed by the G20 in the aftermath of the 2008 global financial crisis, to strengthen the oversight and regulation of non-bank financial intermediation.
Resilient Non-Bank Financial Intermediation – Implementation
Reforms to non-bank financial intermediation (formerly referred to as shadow banking) is one of the FSB’s priority areas for implementation monitoring. The initial set of reforms were outlined in the FSB’s framework for strengthening the oversight and regulation of non-bank entities, which was endorsed by the G20 in 2013. Those reforms focus on five key areas where the FSB has been coordinating and contributing to the development of policies, namely:
mitigating spill-overs between banks and the NBFI sector;
reducing the susceptibility of money market funds (MMFs) to “runs”;
improving transparency and aligning incentives associated with securitisation;
dampening procyclicality and financial stability risks associated with securities financing transactions; and
mitigating systemic risks posed by other non-bank financial entities and activities.
Since then, the FSB and standard-setting bodies have developed additional policy recommendations in some of these areas.
Relevant international standards
| Policy | Relevant policy documents for monitoring | Organisation |
|---|---|---|
| i | Mitigating risks in banks’ interactions with non-bank financial entities. Higher risk-weights for banks’ exposures to unregulated financial institutions (2019) Guidelines: Identification and management of step-in-risk (2017) Supervisory framework for measuring and controlling large exposures (2014) Capital requirements for banks’ equity investments in funds (2013) | Basel Committee on Banking Supervision (BCBS) |
| ii | Reducing the susceptibility of MMFs to “runs”. Policy proposals to enhance MMF resilience (FSB, 2021) Policy Recommendations for MMFs (IOSCO, 2012) | FSB and International Organization of Securities Commissions (IOSCO) |
| iii | Policy measures to improve transparency and align incentives in securitisation. Criteria for identifying simple, transparent and comparable securitisations (BCBS and IOSCO, 2015) Revisions to the securitisation framework (BCBS, 2014), which are now integrated into the consolidated Basel Framework Global Developments in Securitisation Regulation (IOSCO, 2012), especially the recommendations on incentive alignment approaches for securitisation | BCBS, IOSCO |
| iv | Policy recommendations to dampen procyclicality and financial stability risks in securities financing transactions. Regulatory framework for haircuts on non-centrally cleared securities financing transactions (2015; updated in 2019 and 2020) Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos (2013) | FSB |
| v | Assessing and mitigating systemic risks posed by other non-bank financial intermediation entities and activities. Recommendations for Liquidity Risk Management for Collective Investment Schemes (IOSCO, 2018) Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities (FSB, 2017) Policy Framework for Strengthening Oversight and Regulation of Shadow Banking Entities (FSB, 2013) | FSB, IOSCO |
Monitoring and reporting on implementation of NBFI reforms is carried out by the FSB and by the standard-setting bodies for their respective areas, with the main findings presented in chapter 3.4. of the FSB Annual Report.
Implementation progress reports
14 December 2022
Report presents findings on the effectiveness of the FSB Recommendations to address liquidity mismatch in OEFs and proposes follow-up policy work based on those findings.
Assessment shows shadow banking risks have declined significantly.
12 November 2015
This report updates on actions taken to implement the FSB’s strategy to address financial stability concerns associated with shadow banking.
14 November 2014
This document sets out the FSB’s approach to transforming shadow banking into resilient market-based financing to date, and the next steps (roadmap) for 2015.
Peer Reviews
29 July 2020
Peer review of Germany’s macroprudential policy framework and tools, including for non-bank financial intermediation.
19 April 2017
Peer review examines two topics relevant for financial stability in Brazil: trade reporting and its use in systemic risk monitoring, and the regulation and supervision of investment funds.
25 May 2016
This thematic review evaluates the progress made by FSB jurisdictions in implementing the FSB Policy Framework for Strengthening Oversight and Regulation of Shadow Banking Entities.
13 August 2015
The peer review examines two topics relevant for financial stability and important for China: the macroprudential management framework and non-bank credit intermediation.
