The Financial Stability Board (FSB) has released its annual Global Monitoring Report on Non-Bank Financial Intermediation (NBFI), highlighting significant growth in the sector for 2023. The report covers financial intermediation trends across 29 jurisdictions, representing about 88% of global GDP.
In 2023, the NBFI sector expanded by 8.5%, surpassing the banking sector's growth rate of 3.3%. This increase elevated NBFI's share of total global financial assets to nearly 50%, approximately $250 trillion. "Investor inflows to NBFI entities also contributed to the increase," according to the FSB report.
The report details that all NBFI subsectors grew at roughly twice their five-year average rates. Assets within other financial intermediaries (OFIs), a subset of NBFI including money market funds, hedge funds, and structured finance vehicles (SFVs), rose by nearly 10% to just under $160 trillion.
A narrow measure focusing on entities involved in credit intermediation activities with potential bank-like risks increased by almost 10%, reaching $70 trillion—an unprecedented level for this monitoring exercise. Despite these increases, most vulnerability metrics remained stable.
For the first time, data on non-bank fintech lending is included in response to a G20 Data Gaps Initiative recommendation. Ten jurisdictions reported approximately $42 billion in outstanding amounts from non-bank fintech lending.
"The objective of the monitoring exercise is to identify the build-up of vulnerabilities in NBFI and initiate corrective actions where necessary," stated an FSB note. The FSB has been working with international bodies to develop policies aimed at mitigating potential vulnerabilities linked with NBFI activities.
The FSB operates internationally, coordinating national financial authorities and standard-setting bodies while promoting effective regulatory practices for financial stability. It includes national authorities from 24 countries and conducts outreach through six Regional Consultative Groups. Klaas Knot chairs the FSB, which is based in Basel, Switzerland.