Leverage in Nonbank Financial Intermediation (NBFI): Overview of consultation responses and changes to the report to address them

9 July 2025 | PDF full text (150 KB)

Summary of document history

Summary of document history

On 18 December 2024, the FSB published a consultation report on Leverage in Nonbank Financial Intermediation. The objective of the consultation was to gather stakeholder feedback on the proposed recommendations to address financial stability risks arising from leverage in nonbank financial intermediation.

The FSB received 36 responses to the consultation, which ended on 28 February 2025. The majority of responses came from asset managers and capital market and other financial market associations mainly based in the United States and Europe.

This note summarises the feedback received on the consultation report and sets out the main changes made to the final report in order to address them.

Enhancing the Resilience of Nonbank Financial Intermediation: Progress report

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The work carried out to date largely completes the original policy elements of the NBFI work programme. The FSB is therefore shifting its focus to implementation monitoring and the ongoing assessment of vulnerabilities in this sector.

The 2008 global financial crisis, the March 2020 market turmoil, and more recent episodes of market stress have demonstrated that NBFI can create or amplify systemic risk and underscored the need to take policy measures to enhance the sector’s resilience.

The work carried out to date largely completes the original policy elements of the NBFI work programme that were agreed in the aftermath of the March 2020 market turmoil. The focus now is on:

  • ongoing monitoring and in-depth assessment of specific vulnerabilities in NBFI;
  • further work to address data challenges;
  • information sharing and supervisory discussions on authorities’ policy approaches to enhance NBFI resilience; and
  • monitoring implementation of the agreed policies and evaluating their effects.

FSB Workplan to Address Nonbank Data Challenges

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Addressing data challenges is vital to the success of the FSB work programme aimed at building resilience in nonbank financial intermediation.

Taking forward the FSB’s work programme to enhance the monitoring of vulnerabilities in the nonbank sectors and to develop policy recommendations to address the associated financial stability risks depends heavily on reliable data.

In the course of its work, the FSB has identified several data challenges that have hindered the effective assessment of nonbank sector vulnerabilities by authorities.

Given the complexity and importance of ongoing data challenges, the FSB has set up a small, high-level task force: the Nonbank Data Task Force (NDTF). The NDTF, which is chaired by Andrew Bailey, Governor of the Bank of England and FSB Chair, has three objectives:

  1. Improve the ability of FSB member authorities to identify and assess vulnerabilities stemming from nonbank sectors.
  2. Improve the ability of authorities to assess and calibrate policies that could be used to mitigate financial stability vulnerabilities that stem from nonbank sectors.
  3. Explore whether and how authorities could share information (including data) when such sharing could be used to mitigate significant threats to financial stability.
NDTF Workplan

To test how much progress can be made in addressing various nonbank data challenges, the FSB has decided to conduct a test case on “leveraged trading strategies in sovereign bond markets”.

This report, delivered at the request of the G20, presents a plan for how the work on nonbank data challenges will be structured. The FSB intends to finalise a report on the selected test case by mid-2026, which should include ways to address data challenges. Based on the findings and insights from the work of the test case, the FSB will determine whether further work should be undertaken in other areas.

FSB publishes recommendations to address financial stability risks created by leverage in nonbank financial intermediation

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Ref: 13/2025

  • Leverage recommendations give authorities flexibility to select, design and calibrate measures that best address financial stability risks created by NBFI leverage in their jurisdiction, while considering potential adverse effects.
  • NBFI progress report highlights the FSB’s shift from policymaking to monitoring NBFI vulnerabilities, addressing data challenges, sharing members’ insights and policy approaches, and evaluating policy implementation.
  • A Nonbank Data Task Force, chaired by FSB Chair Andrew Bailey, is assessing ways to address key nonbank data challenges through a test case on leveraged trading strategies in sovereign bond markets.

The Financial Stability Board (FSB) today published three reports related to its work programme to enhance resilience in nonbank financial intermediation (NBFI).

Final policy recommendations to address financial stability risks created by NBFI leverage

The recommendations on NBFI leverage, which have been delivered to the G20, set out an integrated approach for addressing financial stability risks created by NBFI leverage. Under this approach, authorities should identify such risks and have appropriate policy measures in place to address the risks they identify. The recommendations provide authorities with flexibility to tailor their policy responses to their jurisdiction-specific circumstances. This includes selecting, designing, and calibrating policy measures – or combinations of measures – that address financial stability risks, while considering potential adverse effects. Authorities will share their policy responses, for example, through FSB supervisory discussions.

The recommendations are directed at FSB member authorities and focus on markets, entities, and activities where NBFI leverage poses financial stability risks. These risks vary across jurisdictions. The FSB and standard-setting bodies (SSBs) will undertake further work to support and assist authorities in applying the recommendations. This work will begin with supervisory discussions among authorities and, later this year, members will consider whether to pursue follow-up work on certain recommendations, including defining the potential scope of that work.

The recommendations reflect feedback from a public consultation. In particular, the FSB acknowledges the high degree of heterogeneity of nonbanks; that leverage in some NBFI segments is relatively limited and is not likely to pose financial stability risks; the differences between banks and various types of nonbanks, which have motivated different regulatory approaches; and that certain leveraged activities by nonbanks can facilitate hedging, enhance efficiency and support liquidity in financial markets.

Annual NBFI progress report

The 2025 NBFI Progress Report notes that the work carried out to date largely completes the original policy elements of the FSB’s NBFI work programme, which were agreed upon in response to the March 2020 market turmoil. The FSB’s work will now shift from policymaking to assessing vulnerabilities, addressing data challenges, sharing members’ policy insights, and evaluating the implementation and impact of reforms.

Workplan to address nonbank data challenges

In carrying out the NBFI work programme, the FSB identified several data challenges that hinder authorities’ ability to effectively assess vulnerabilities in the nonbank sectors. To address this, the FSB has established the Nonbank Data Task Force (NDTF), chaired by the FSB Chair, Andrew Bailey. The NDTF has three objectives:

  1. Improve the ability of FSB member authorities to identify and assess vulnerabilities stemming from nonbank sectors.
  2. Improve the ability of authorities to assess and calibrate policies to mitigate financial stability risks stemming from nonbank sectors.
  3. Explore whether and how authorities could share information, including data, to mitigate significant financial stability threats.

As part of this work, the FSB has launched a test case on leveraged trading strategies in sovereign bond markets to assess how much progress can be made in addressing key nonbank data challenges. This area was chosen due to its critical importance to financial stability and the key data challenges it presents, including some with a significant cross-border dimension.

At the request of the South African G20 Presidency, the FSB is submitting a workplan to address nonbank data challenges, which outlines how the NDTF’s work will be structured and the next steps. The FSB will publish a report on the NDTF test case by mid-2026, detailing ways to address the identified data challenges. Following this, the FSB will determine whether further work should be undertaken in other areas.

In parallel, the FSB has also decided to conduct an analytical deep dive on vulnerabilities in private credit, which will include the identification of data challenges in this area.

Notes to editors

The FSB published in November 2020 a Holistic Review of the March Market Turmoil, which laid out a comprehensive and ambitious work programme for strengthening the resilience of the NBFI sector while preserving its benefits. This work is being carried out within the FSB as well as by its member SSBs and international organisations, to ensure that relevant experiences and perspectives are brought to bear.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Andrew Bailey, Governor of the Bank of England. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

Public webinar on the FSB’s recommendations to address leverage in nonbank financial intermediation

23 June 2025

Summary of document history

Summary of document history

The FSB held a webinar to present its recommendations to address risks arising from leverage in nonbank financial intermediation on Wednesday 9 July, hosted by the Bank of England

On Wednesday 9 July, the FSB published its recommendations to address financial stability risks arising from leverage in nonbank financial intermediation. The recommendations follow a public consultation and incorporate the feedback received from it.

 The webinar was hosted by Andrew Bailey, Chair of the Financial Stability Board and Governor of the Bank of England. He will be joined by:

  • Cornelia Holthausen, Director General, DG Macroprudential Policy and Financial Stability, European Central Bank
  • Sarah Pritchard, Executive Director, UK Financial Conduct Authority
  • John Schindler, Secretary General, Financial Stability Board

 This webinar was open to all.

FSB examines vulnerabilities in non-bank commercial real estate (CRE) investors

19 June 2025

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Ref: 12/2025

  • FSB identifies liquidity mismatches, leverage, and valuation opacity as the main vulnerabilities in real estate investment trusts (REITs) and property funds.
  • Report also notes complex interlinkages between banks and non-bank CRE investors, which increases the potential for spillovers from CRE market shocks.
  • Report underscores the importance of closing data gaps to enhance authorities’ ability to monitor risks from non-banks’ involvement in CRE.

The Financial Stability Board (FSB) today published a report analysing the vulnerabilities in non-bank commercial real estate investors. The report builds on the findings of the 2024 FSB report on interest rate and liquidity risks in the financial system, which identified non-bank CRE investors – comprising real estate investment trusts (REITs), property funds, and other non-bank mortgage lenders – as one of the entity types vulnerable to higher interest rates.

Data from FSB members suggests banks and nonbanks collectively provided at least $12 trillion in equity and debt financing to CRE in 2023. While banks remain the main source of such financing, non-bank investors – particularly property funds and REITs – play a significant role in some jurisdictions. The report identifies three main vulnerabilities in these investors:

The report also highlights the complex interlinkages between banks and non-bank CRE investors. Banks are the main debt providers to, and can also invest in, REITs and property funds. Banks may also have common asset exposures to these investors, which increases the potential for shocks to the CRE market spilling over to the banking sector. A more complete overview of these interlinkages is limited by considerable data gaps, despite improvements in recent years. Closing some of these gaps would enhance authorities’ ability to monitor risks.

So far, the global financial system has weathered the recent adverse developments in the CRE market. This can be attributed to the market’s heterogeneity; lower loan-to-value levels than previous episodes of stress; and the ability of some distressed borrowers to refinance. However, ongoing monitoring of the market is warranted given the more volatile performance of CRE exposures compared to other assets, structural shifts in demand, and the effects of extreme weather events and new energy efficiency standards in some jurisdictions.

Notes to editors

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.

Vulnerabilities in Non-bank Commercial Real Estate Investors

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Ongoing monitoring of the commercial real estate (CRE) market is warranted given the more volatile performance of CRE exposures compared to other assets, structural shifts in demand, and other factors.

The commercial real estate (CRE) market has experienced significant stress in recent years. Certain segments, such as offices and retail space, experienced weak demand since the COVID-19 pandemic due to the shift to home working. Stress was also caused by the increased borrowing costs that took place in 2022 and 2023 in a number of advanced economies. The 2024 FSB report on the confluence of interest rate and liquidity risks in the financial system identified, among other things, non-bank CRE investors – comprising real estate investment trusts (REITs), property funds, and other non-bank mortgage lenders – as one of the entity types vulnerable to higher interest rates.

This report examines the main vulnerabilities associated with non-bank CRE investors, particularly REITs and property funds. It provides an overview of global CRE markets, looking at definitions, market size, and recent performance trends, as well as exposures and interlinkages among market participants. The report also identifies data gaps that hinder effective monitoring of non-banks’ involvement in CRE at a jurisdictional and global level.

See more charts by selecting from the dropdown menu

Source: FSB

Changes since 2018

2018 = 100

The trends for TR coincide with the high inflation taking place since November 2021 and is displayed on the left axis for some panels.

Source: FSB member submissions; JLL Research.

Source: MSCI (2024), Real Estate Market Size, July.

FSB Regional Consultative Group for the Americas meets in Nassau

17 June 2025

The Financial Stability Board (FSB) Regional Consultative Group for the Americas met on 17 June in Nassau, hosted by the Central Bank of the Bahamas.

The meeting, which brings together senior officials from central banks, financial authorities and regulatory bodies in the region covered:

  • Global financial market developments and the outlook for financial stability in the region.
  • Progress toward achieving the goals of the G20 Roadmap to enhance cross-border payments.
  • Recent developments and approaches to monitoring vulnerabilities in the non-bank financial intermediation sector.

Members thanked the out-going chairs, Tiff Macklem and Kenneth Baker, and discussed potential future topics for collaboration and exploration.

FSB Regional Consultative Group for Sub-Saharan Africa meets in Livingstone

The Financial Stability Board (FSB) Regional Consultative Group for Sub-Saharan Africa (RCG SSA) met on 17 June in Livingstone, hosted by the Bank of Zambia.

Members exchanged views on financial vulnerabilities at the global and regional level; the impact of extreme weather events in Sub-Saharan Africa and how the private and public sectors can best prepare for such events; and progress on the G20 Roadmap on cross-border payments, including challenges faced by both the public and private sector to effect tangible improvements in payment arrangements.

Members also shared recent regional developments in crypto-assets and stablecoins, including steps to implement the FSB’s regulatory framework.

FSB Plenary meets in Madrid

12 June 2025

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Ref: 11/2025

The Financial Stability Board (FSB) Plenary met in Madrid on 11 June to discuss key priorities for global financial stability.

The Plenary confirmed the appointment of Andrew Bailey, Governor of the Bank of England, as the next FSB Chair for a three-year term beginning on 1 July 2025. Plenary members thanked Klaas Knot for his leadership and guidance in steering the work of the FSB over the past four years.

Members discussed vulnerabilities in the global financial system, issues related to non-bank financial intermediation (NBFI), crypto-assets, climate-related financial risks, and resolution.

Financial stability outlook

Financial markets have largely stabilised following the sudden and severe spike in market volatility in April 2025 that followed the announcement of US trade tariffs and retaliatory action by some other jurisdictions. The episode illustrated how elevated asset prices, which were highlighted as a vulnerability in recent FSB work, can be susceptible to a sudden unwind in the event of an external shock. Plenary members noted that financial markets remained resilient through this episode, despite much higher trading volumes. Nevertheless, members cautioned that there remains a risk of further market strains given the uncertainty about the economic outlook and the potential for unexpected policy changes.

Members also highlighted key vulnerabilities requiring attention in the coming months. Debt levels, in particular government debt, are high, and debt dynamics are projected to worsen in a number of jurisdictions. Potential vulnerabilities from leverage and liquidity mismatches in parts of the NBFI sector remain, while operational failures can impact critical parts of the financial system. Growing interlinkages between crypto-asset markets and the financial system and increasing use cases for stablecoins warrant closer monitoring.

Non-bank financial intermediation

The Plenary reviewed the FSB’s upcoming recommendations on NBFI leverage, which will be delivered to the G20 in July, and discussed the medium-term work plan aimed at enhancing resilience in NBFI.

Taking forward the FSB’s work programme to enhance the resilience of NBFI depends heavily on reliable data. In the course of its work, the FSB has identified several data challenges that have hindered the effective assessment of nonbank sector vulnerabilities by authorities. The FSB has set up a high-level task force, the Nonbank Data Task Force – chaired by incoming FSB Chair Andrew Bailey – to address these challenges. The Plenary received an update on the Taskforce’s work and approved a near-term focus on use of leverage in government bond markets.

The FSB will publish a report in July detailing progress on its overall NBFI work programme, and a report outlining its workplan to address nonbank data challenges.

FSB work programme updates

The Plenary discussed progress on the FSB’s work programme for 2025 and received updates on key initiatives from its committees. 

The Plenary reviewed the status of the FSB Roadmap for addressing climate-related financial risks, on which the FSB has been asked to provide a progress report to the July G20 meeting. As part of annual work programme discussions, FSB members will continue to evaluate how the analysis of topics, such as physical risks and gaps in insurance coverage, may contribute to a better understanding of financial stability risks.

Members received updates on the implementation of the FSB’s global recommendations and the ongoing crypto thematic peer review, which will be delivered to the G20 later this year.

The Plenary also discussed progress on the Resolution Steering Group’s key initiatives and future priorities. Members expressed support for ongoing efforts to strengthen resolution effectiveness and enhance crisis preparedness.

Notes to editors

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland and hosted by the Bank for International Settlements.