John Schindler, the Secretary General of the Financial
Stability Board (FSB), delivered a speech last month on financial
headwinds.
Perhaps unsurprisingly, given the ever-increasing financial
stability-driven focus of policymakers on the funds sector, the
speech focussed almost exclusively on non-bank financial
intermediation (NBFI), AKA shadow banking, a broad heterogeneous
sector of which investment funds is a key component.
While better known for its banking reform agenda, Mr Schindler
submits that NBFI has been a focus of the FSB from its earliest
days. But now that global regulatory reforms have increased the
resilience of the banking sector, the FSB is emphatically focussed
on the key vulnerabilities associated with leverage, liquidity and
interconnectedness in NBFI; vulnerabilities which the FSB sees as
common to both banks and non-banks.
