FSB Chair calls for further progress in implementing NBFI reforms
22 July 2024 Switzerland
Image: Yury_Zap/stock.adobe.com
The Financial Stability Board (FSB) has published a letter from its chair, Klass Knot, noting non-bank financial intermediation (NBFI) as an area 鈥渄eserving continuing attention鈥�.
Knot indicates high debt levels and vulnerabilities in NBFI as key risks to financial stability.
In addition, he flags uneven progress in the implementation of agreed NBFI policies and signifies the need to finalise and implement these in a timely fashion.
The letter highlights that many of the underlying vulnerabilities that contributed to stress in the NBFI sector during recent market incidents are still largely in place.
Knot produced the letter ahead of the G20 meeting on 25-26 July, and has called for the full implementation of the agreed G20 financial regulatory reforms to address vulnerabilities.
The NBFI progress report pinpoints a number of challenges hampering progress, including data challenges that impede a full assessment of NBFI vulnerabilities and the formulation of effective policy responses, according to the FSB.
Addressing leverage-related vulnerabilities in NBFI is a key area of current policy focus, adds Knot. The FSB looks to publish a consultation report with proposed policy solutions by the end of 2024.
The FSB continues to monitor and analyse NBFI vulnerabilities on an ongoing basis through the development of additional metrics and analytical tools, as well as through targeted deep dives in specific areas, including solvency and liquidity risks in an environment of rising interest rates, and vulnerabilities in private credit.
Knot indicates high debt levels and vulnerabilities in NBFI as key risks to financial stability.
In addition, he flags uneven progress in the implementation of agreed NBFI policies and signifies the need to finalise and implement these in a timely fashion.
The letter highlights that many of the underlying vulnerabilities that contributed to stress in the NBFI sector during recent market incidents are still largely in place.
Knot produced the letter ahead of the G20 meeting on 25-26 July, and has called for the full implementation of the agreed G20 financial regulatory reforms to address vulnerabilities.
The NBFI progress report pinpoints a number of challenges hampering progress, including data challenges that impede a full assessment of NBFI vulnerabilities and the formulation of effective policy responses, according to the FSB.
Addressing leverage-related vulnerabilities in NBFI is a key area of current policy focus, adds Knot. The FSB looks to publish a consultation report with proposed policy solutions by the end of 2024.
The FSB continues to monitor and analyse NBFI vulnerabilities on an ongoing basis through the development of additional metrics and analytical tools, as well as through targeted deep dives in specific areas, including solvency and liquidity risks in an environment of rising interest rates, and vulnerabilities in private credit.
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