Non-bank financial intermediation provides a valuable alternative to bank financing and helps to support real economic activity. However, if such intermediation involves bank-like risks, such as maturity/liquidity transformation and/or leverage, it can become a source of systemic risk. This risk can be compounded where non-bank activities have links to the banking system.

The FSB’s work on non-bank financial intermediation follows a two-pronged strategy:

  • Monitoring – an annual system-wide monitoring exercise to assess global trends and risks of non-bank financial intermediation; and

  • Policymaking – developing a range of policy recommendations to address the financial stability risks from non-bank financial intermediation.

The objective of the FSB’s work is to ensure that non-bank financial intermediation is subject to appropriate oversight and regulation to address bank-like risks to financial stability emerging outside of the regular banking system while not inhibiting sustainable non-bank financing models that do not pose such risks. The approach is designed to be proportionate to financial stability risks, focusing on those activities that are material to the system, using as a starting point those that were a source of problems during the crisis.

The FSB had initially used the term “shadow banking” for its work to enhance resilience of non-bank financial intermediation, as it was the term most commonly employed and, in particular, had been used in previous G20 communications. In October 2018, the FSB announced that it decided to replace the term “shadow banking” with the term “non-bank financial intermediation” in future communications. The new terminology emphasises the forward-looking aspects of the FSB’s work to enhance the resilience of non-bank financial intermediation. The change in the terminology is intended to clarify the use of technical terms, and does not affect the substance of the agreed monitoring framework and policy recommendations.


Since 2011, the FSB has undertaken an annual monitoring exercise to assess global trends and risks in non-bank financial intermediation. The monitoring exercise starts by casting the net wide to take a view of assets across the whole financial sector and then focuses on a narrow measure of financial activities that could pose bank-like financial stability risks (e.g. maturity/liquidity transformation, leverage). To arrive at the narrow measure, non-bank financial entities are classified into five economic functions, each of which involves non-bank credit intermediation that may pose bank-like financial stability risks.

The narrow measure assesses risk before policy measures and risk management tools are applied. This allows authorities to separately assess the effectiveness of existing policy tools to address financial stability risks from non-bank financial intermediation and identify any residual risks that may warrant policy responses.

Exhibit 0-1 Global Shadow Banking Monitoring Report 2017

The latest monitoring report was published in March 2018 (as the Global Shadow Banking Monitoring Report 2017), and found that the narrow measure grew by 7.6% to $45.2 trillion at end-2016. Within the narrow measure, collective investment vehicles with features that make them susceptible to runs represented 72%, growing by around 11% in 2016. Non-bank financial entities engaged in loan provision that is dependent on short-term funding, such as finance companies, shrank by almost 4% in 2016, to 6% of the narrow measure. Market intermediaries that depend on short-term funding or secured funding of client assets (e.g. broker-dealers) declined by 3%, to 8% of the narrow measure by end-2016.


At the November 2010 Seoul Summit, the G20 Leaders asked the FSB to develop policy recommendations to strengthen the oversight and regulation of shadow banking (now known as non-bank financial intermediation). The FSB has been coordinating and contributing to the development of policies in five areas where oversight and regulation needs to be strengthened to mitigate the potential systemic risks associated with non-bank financial intermediation, namely:

  1. mitigating spill-over risks between the banking system and the system of non-bank financial intermediation;

  2. reducing the susceptibility of money market funds (MMFs) to “runs”;

  3. improving transparency and aligning incentives associated with securitisation;

  4. dampening procyclicality and other financial stability risks associated with securities financing transactions such as repos and securities lending; and

  5. assessing and mitigating systemic risks posed by other non-bank financial entities and activities.

When implemented, this integrated set of policies should mitigate bank-like financial stability risks from non-bank financial intermediation and enhance its resilience so that it can support sustainable economic growth.

In July 2017, the FSB reported to the G20 Leaders its assessment of the evolution of non-bank finanical intermediation activities and risks since the global financial crisis, and the adequacy of post-crisis policies and monitoring to address these risks. The assessment underscored the importance of a system-wide oversight framework, and recommended further strengthening of the oversight and monitoring of non-bank financial intermediation and enhancements to the data collection framework. At the time of the assessment, the FSB did not identify new financial stability risks that would warrant additional regulatory action at the global level. New forms of non-bank financial intermediation were nevertheless likely to develop in the future, emphasising the importance of continued monitoring to mitigate associated risks and support enhancing their resilience. To address residual gaps and further enhance oversight, FSB member authorities agreed on seven recommendations, which are described in the assessment.