Global shadow banking assets touch $75 trillion

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Updated: November 01, 2014 3:39 PM

United States and the euro area now account for one-third of the global shadow banking assets.

Shadow banking refers to credit intermediation involving entities and activities outside the regular banking system.Shadow banking refers to credit intermediation involving entities and activities outside the regular banking system.

The United States and the euro area now account for one-third of the global shadow banking assets that have climbed by $5 trillion to $75 trillion in 2013, the Financial Stability Board (FSB) has said in its latest report.

  • Broadly, shadow banking refers to credit intermediation involving entities and activities outside the regular banking system
  • The FSB, a global body promoting regulatory policies, also said these assets account for about 25% of the total financial assets
  • The three top jurisdictions accounting for most of the shadow banking activity are: Euro area, UK and China
  • The FSB has analysed assets of Other Financial Intermediaries — prone to shadow banking risks

The report found that shadow banking tends to take off in advanced economies as the following conditions are usually in place:

  • Strict banking rules, low real interest rates, yield spreads
  • Investors searching for higher returns
  • Large demand for assets from institutions

 

 

Shadow-banking

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