Speakers
Objectives
Over the past two decades, non-bank financial institutions (NBFIs) have become increasingly important actors in the global financial system. Today, NBFIs— including investment funds, insurance companies, pension funds, hedge funds and private credit providers — represent nearly 50% of total global financial assets, according to the Financial Stability Board (FSB). In the EU, the sector has grown rapidly, with non-bank financial intermediation accounting for over €45 trillion in assets, exceeding the size of the banking sector in some jurisdictions.NBFIs play a critical role in financing the economy, particularly by offering long-term investment solutions and providing alternative sources of credit to businesses and households. However, the expansion of this sector has been accompanied by new sources of systemic risk, particularly due to leverage, liquidity mismatch, and interconnectedness with the banking system and core financial markets.This session aims to explore the remaining challenges in enhancing the resilience of NBFIs, with a particular focus on:
– The adequacy of current microprudential and supervisory frameworks, including whether existing regulations such as Solvency II, AIFMD, and UCITS sufficiently capture the risks posed by a wide variety of NBFI actors.
– The design and deployment of macroprudential and micro prudential tools to address systemic risks such as leverage build-up, liquidity mismatches, procyclical margining, and financial contagion.
Points of discussion
- Are current micro prudential and supervisory frameworks applicable to non-bank financial institutions in Europe and worldwide adequate to monitor and mitigate their risks and those associated with the interconnectedness of these institutions?
- How can macroprudential and microprudential tools be tailored at the EU and international levels to address systemic risks in the NBFI sector and the inter-connections between these institutions and also between them and banking institutions?