Monetary Matters with Jack Farley Non-Bank Leverage & Financial Stability | Financial Stability Board General Secretary John Schindler
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Aug 31, 2025 John Schindler, General Secretary of the Financial Stability Board, tackles the rise of non-bank financial intermediation (NBFI) and its associated leverage risks. He delves into data transparency challenges and offers insights into regulatory frameworks necessary for stability. Schindler also analyzes the September 2023 Gilt Market Panic, reflecting on the lessons learned. The discussion emphasizes the need for better oversight of private credit and the evolving landscape of stablecoins, underscoring the shared global responsibility to mitigate these financial risks.
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Non-Bank Sector Is Systemically Bigger
- Non-bank financial intermediation (NBFI) has grown materially since the global financial crisis, shifting tens of trillions of dollars of intermediation outside banks.
- This shift raises systemic importance because non-banks now play larger roles in market stress and can amplify spillovers.
Start With A Local Risk Assessment
- Authorities should perform jurisdiction-specific risk assessments of their non-bank sectors and identify core markets where leverage is concentrated.
- Then apply targeted activity- or entity-based measures such as upfront margin requirements or leverage limits to those vulnerabilities.
Data Gaps Obscure Systemic Risks
- Data collection for non-banks is inconsistent and often designed for investor protection, not financial stability, creating opacity for systemic risk monitoring.
- That opacity hampers regulators' ability to identify and calibrate policies for vulnerabilities like leverage and liquidity mismatch.