Thematic Review on the Implementation of the FSB Policy Framework for Shadow Banking Entities
This thematic peer review evaluates the progress made by FSB jurisdictions in implementing the FSB Policy Framework for Strengthening Oversight and Regulation of Shadow Banking Entities. The Policy Framework sets forth principles that authorities should adhere to in their oversight of non-bank financial entities posing financial stability risks from shadow banking. These principles involve: defining and updating the regulatory perimeter; collecting information and assessing shadow banking risks (i.e. maturity/liquidity transformation, imperfect credit risk transfer and/or leverage); enhancing public disclosure to help market participants understand these risks; adopting appropriate policy tools to mitigate identified risks; and participating in an information-sharing exercise within the FSB on assessments and tools.
The peer review concludes that, notwithstanding the progress made, implementation of the Policy Framework remains at a relatively early stage. More work is needed to ensure that jurisdictions can comprehensively assess and respond to potential shadow banking risks posed by non-bank financial entities, and to support FSB risk assessments and policy discussions. The review makes recommendations to FSB jurisdictions to implement fully the Policy Framework. The FSB will also conduct follow-up work to: enhance consistency across jurisdictions in their classification of non-bank financial entities into economic functions; develop approaches to help jurisdictions better monitor and assess risks from those entities’ interconnectedness and cross-border activities; and facilitate the sharing of information among member authorities on policy tools and public disclosures.