Global shadow banking assets touch $75 trillion

Marking a substantial increase, global shadow banking assets climbed by USD 5 trillion to USD 75 trillion last year, with euro area and the United States accounting for one-third of the total, says a report.
In its latest report, the Financial Stability Board (FSB) also said these assets account for about 25 per cent of the total financial assets.
Broadly, shadow banking refers to credit intermediation involving entities and activities outside of the regular banking system.
The Monitoring Universe of Non-Bank Financial Intermediation (MUNFI), grew by USD 5 trillion in 2013 to reach USD 75 trillion, FSB said.
MUNFI is based on the financial assets of Other Financial Intermediaries (OFIs) and captures all non-bank financial intermediation where shadow banking-related risks to the financial system might potentially arise.

"The euro area and the US have the largest OFI sectors, each with just above USD 25 trillion in 2013, representing a third of global MUNFI assets," the report released yesterday said.

Last year, shadow banking assets grew seven per cent, mainly on the back of general increase in valuation of global financial markets.
"Globally, MUNFI assets represent on average about 25 per cent of total financial assets, roughly half of banking system assets, and 120 per cent of GDP. These ratios have been relatively stable since 2008," it said.
The report includes data from 25 jurisdictions, including India, and the euro area as a whole, which together account for about 80 per cent of global GDP and 90 per cent of global financial system assets.

On the basis of granular data reported by 23 jurisdictions, FSB said that the broad MUNFI estimate of non-bank financial intermediation was narrowed down from to USD 35 trillion from USD 62 trillion.
"Trust Companies and Other Investment Funds were the fastest growing sub-sectors globally in 2013. Trust Companies have consistently grown at a fast pace, whereas the 18 per cent annual growth in Other Investment Funds, the largest sub-sector, was sharply higher than in the preceding years," the report said.
A global grouping, FSB has been established to coordinate work of national financial authorities and international standard setting bodies to promote effective regulatory, supervisory and other financial sector policies.