Risks from non-bank financial intermediaries (NBFIs) such as private equity and hedge funds can arise in a variety of ways, says Supervisory Board member Elizabeth McCaul. For example: ➡ via the correlation of exposures where risk can spill over from NBFIs to banks ➡ via hedging strategies being applied to the same exposures in both the regulated banking market and the NBFI market To manage risks from the NBFI sector, we need a clear view of the extent to which banks are exposed to NBFI balance sheet risk. Read the full interview https://lnkd.in/ggRYPJuv
Patra Wijaya
2mo
👍💙💚🌍🌎🌏🎉innovation, technology and competition for various innovations, (one*** solving problems)*, climate problems, inflation, economic crisis, crime, poverty etc., is there a way out (there were scientists in the past who could reduce these problems), even though it was simple? ??? but useful, example: China, consciously or unconsciously has implemented it, almost 80% of developing countries have not implemented it, the United States has a lot of technology and is starting to forget simple things...
Jens Tolckmitt
2mo
Risks allocated in the NBFI sector are a potential risk for financial stability in itself - and not only because the banking sector might indirectly be exposed to it. There is a very obvious strategy to mitigate that: same risks require same rules wherever in the financial system they occur. Undortunately, this has been consistently neglected by regulators and policymakers over the last 15 years. To date, regulators even seem to lack the data to properly assess the overall risks allocated with NBFIs.
Mark Hanhart
1mo
Very much agree. There are even more "external" risk factors that are impacting traditional banks: think, for instance of Open Banking and Embedded Financing. On the one hand the volumes are not yet as high as the various hypes suggested. On the other hand, room for risk management is decreasing due to ever more seamless integration and instant payments, which in turn may increase volumes. Yet another reason to increase vigilance regarding such "external" risk factors.
sven riehl
1mo
Elisabeth, great to read from you, and thanks for pointing this out, a real matter for risk management and risk appetite perspective. trust all is well at your end,
Harry Nicolas
2mo
Brilliant interview , wonderful analysis Elizabeth Congratulations ! Many thanks for sharing!
Real Estate / Equity / Quant Risk
2mo#ZeroCredibility☝🏻🤡 #resetECB♻️ NBFIs are the way to go to escspe the increasingly totalitarian grip of over-regulation and suffocating EU-technocracy! Risks from politically weaponized institutions like ECB can do much more damage, says the experience of the last 5 years: 👇🏻😉 ➡️ Politicised ECB under Lagarde - serving fiscal interests of overleveraged governments over it's actual mandate - pushed it's QE and interest rates gamble to the ultimate limit over the last 5 years - fuelling irrational exuberance and bubbles in many segments of financial markets and allowing for a wide spread of unsustainable valuations and related financial risks throughout the financial system. ➡️ Supervisory side of the ECB watched🦉 idly how policy side facilitated irrational exuberance, encouraged public #debt🚀 and undermined foundations of macroprudential stability by facilitating accumulation of assets priced at unsustainable interest rates levels throughout the financial sector and on the balance sheet of the ECB itself.