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OpEdNews Op Eds    H2'ed 11/13/19

Shadow Banking a Growing Threat to Global Financial Stability

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A new global financial regulatory agency, the Financial Stability Board (FSB), quietly emerged from the dust of the Great Recession of 2007. "The FSB's creation came after the G20 Summit in London in April 2009.

Headquartered in Basel, Switzerland, the board includes all G20 major economies. The FSB consists of 68-member institutions. It comprises several central banks, ministries of finance, and supervisory and regulatory authorities from 25 jurisdictions, as well as 10 international organizations and six Regional Consultative Groups (RCGs). It's stated purpose seems to be, "... policy work to enhance the resilience of non-bank financial intermediation... [focusing] on those parts of non-bank financial intermediation that perform economic functions which may give rise to bank-like financial stability risks."

In other words, global shadow banking and finance networks have grown so large and powerful that they pose a threat to the whole nation-based international banking and finance system.

The Financial Stability Board says they are responsible for:

 Preparing annual reports on the implementation of reforms and their effects

 Coordinating financial sector policies

 Conducting outreach activities [To WHOM?]

 Building resilient financial institutions

 Addressing SIFIs [Systemically Important Financial Institutions]

 Making the derivates market safer [Which was the epicenter of the financial collapse in 2007]

 Enhancing the resilience of non-bank financial intermediation [NBFI]

 Formulating additional policies on specific areas of the global financial market

 Preparing progress reports to the G20

. Conducting peer reviews

 Analyzing the effects of reforms

So, this is an autonomous international agency reporting to the G20, yet it is independent of the G20 or any other democratically elected government authority. It analyzes and proposes and monitors non-government enforced regulations of cross-border financial interactions between traditional international banking institutions and the global shadow banking institutions. It exists to keep the global economy on an even keel, and it prepares reports. Here is their 2018 report on the health and extent of global, non-standard financial institutions. Global Monitoring Report on Non-Bank Financial Intermediation 2018

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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...)

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