
Hyun Song Shin on the New Financial Stability Risks
Odd Lots
The Changing Nature of Risks and Players in Finance
The Global Financial Crisis (GFC) was mainly focused on the banking sector, particularly credit risk. However, even safe securities can be at the center of financial stress events, as seen in the Treasury market in March 2020 and the UK guilt episode. The nature of risks has shifted to non-bank players, including non-bank financial intermediaries (MBFR). These intermediaries, such as asset managers, life insurance companies, pension funds, and hedge funds, have become influential in the financial system. Additionally, infrastructures like central counterparties and exchanges have gained importance. This evolution highlights the need to understand the different players and propagation mechanisms in the financial landscape.