Send a Tweet
Most Popular Choices
Share on Facebook 7 Share on Twitter 13 Printer Friendly Page More Sharing
Exclusive to OpEdNews:
OpEdNews Op Eds    H2'ed 11/13/19

Shadow Banking a Growing Threat to Global Financial Stability

By       (Page 2 of 2 pages) Become a premium member to see this article and all articles as one long page. (View How Many People Read This)   11 comments
Author 2220
Follow Me on Twitter     Message Brian Lynch
Become a Fan
  (12 fans)

Have you ever heard of NBFI, "Non-Bank Financial Intermediation?"

I first came across this term looking for information about a high-end tourist destination, a small, self-governing island in the Caribean, one of many such places. In addition to high-end tourism, its economy is also dependent on offshore financial services. Among the financial services listed on the internet about the Island's economy is the 'financial intermediation sector. (The what, I ask? )

Section #4 of the FSB report explains that financial intermediation: "" focuses on those parts of non-bank financial intermediation where bank-like financial stability risks may arise. The narrow measure of non-bank financial intermediation, which reflects an activity-based "economic function" assessment of risks, grew by 8.5% to $51.6 trillion in 2017, at a slightly slower pace than 2011-16. The narrow measure of non-bank financial intermediation, which reflects an activity-based "economic function" assessment of risks, grew by 8.5% to $51.6 trillion in 2017, at a slightly slower pace than 2011-16.

Since 2011, the Cayman Islands, China, Ireland, and Luxembourg together have accounted for over two-thirds of the dollar value increase. The narrow measure represents 14% of total global financial assets. Key components include:

· Collective investment vehicles (CIVs)

· Non-bank financial entities engaging in loan provision that is dependent on short-term funding

· Market intermediaries that depend on short-term funding or secured funding

· Securitisation-based credit intermediation

Section 2 provides an overview of, "Other Financial Intermediaries" (OFIs) aggregate, which includes all financial institutions that are not central banks, banks, insurance corporations, pension funds, public financial institutions or financial auxiliaries. These alt-financial entities grew by 7.6% in 2017. OFIs' growth exceeded that of banks, insurance corporations, and pension funds. With $116.6 trillion, OFI assets represent 30.5% of total global financial assets, the largest share on record."

FBS depiction of connections between International Financial Institutions and Non-Bank .Shadow. Financial Institutions.
FBS depiction of connections between International Financial Institutions and Non-Bank .Shadow. Financial Institutions.
(
Image by FBS)   Details   DMCA

These opaque, unaccountable entities are apparently a go-to source for loans by the global banks and nation-based financial institutions. In November 2010, the FSB defined shadow banking as "credit intermediation involving entities and activities (fully or partly) outside of the regular banking system"

Then, On 22 October 2018, the FSB announced its decision to replace the term "shadow banking" with the term "non-bank financial intermediation," a less sinister sounding accommodation.


So, what is really going on here?

It seems as if billionaires, oligarchs, and their self-dealing minions are growing an alternate financial network that is fully, or partially outside the bounds of national controls. It is certainly outside the direct control of the traditional international banking and finance systems. Traditional international bank institutions appear to be both fearful of, and increasingly dependent on this dark money financing. The FSB writes, "Non-bank financing provides a valuable alternative to bank financing for many firms and households, fostering competition in the supply of financing and supporting economic activity."

Competition indeed. The OFIs alone account for close to a third of all the world's financial wealth. This appears to be a socially malignant treasury of wealth with no direct productive value. It is accessible only to wealthy corporations and the very rich. Its capital gains cannot be taxed for the benefit of any global society.

This whole development may be more than a financial risk to the global economy. It may be a burgeoning threat to the sovereignty of nations and the sanctity of self-governing democracies everywhere. It is a development worthy of our attention and vigilance.

Read the full FSB report here:https://www.fsb.org/wp-content/uploads/P040219.pdf

Next Page  1  |  2

 

Must Read 1   Well Said 1   Valuable 1  
Rate It | View Ratings

Brian Lynch Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Brian Lynch is a retired social worker who worked in the areas of adult mental health and child protection for many years. His work brought him into direct contact with all the major social issues of the day and many of our basic social (more...)
 

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Follow Me on Twitter     Writers Guidelines
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEdNews Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Media Silent on Fukushima Radiation Impact in US

Creepy Netflix Discovery Highlights What's Wrong with Social Media Today

Houston, Take Down This Threatening Message

Propaganda in the Digital Age - Mind Control on a Massive Scale

Wage History and The Case for A Living Wage

On September 19th Donald Trump Declared Himself Our Dictator

To View Comments or Join the Conversation: