Building bridges: FSB calls for better data on the non-bank sector

Posted on September 20, 2024 by Editor

Last week, John Schindler, Secretary General of the Financial Stability Board (FSB), addressed the Eurofi Financial Forum in Budapest, stressing the need for better data and regulatory coordination in the non-bank financial sector. Schindler highlighted the sector's growing influence on global financial stability and the critical gaps in oversight that could expose the system to new risks.

The non-bank financial sector, with over $220 trillion in assets, has become increasingly integral to the global economy, but also poses vulnerabilities during market stress. Schindler emphasised that we can no longer treat it as a monolithic entity, calling for a more detailed approach to regulation. He outlined the urgent need to dissect the sector into its components and develop tailored regulations to address the specific risks posed by its diverse activities.

Schindler's speech underscored a recurring challenge: a lack of transparency in the non-bank sector. The FSB has worked to improve data collection but continues to face gaps, especially around leverage, liquidity mismatches, and interconnectedness. Schindler advocated for enhanced data quality and sharing, which is essential for identifying risks before they escalate. Data standards could play a pivotal role in bridging these data gaps, facilitating more precise financial stability assessments with more usable data.

You can read Schindler's full speech here.