ESRB: Report on financial stability risks from linkages between banks and the non-bank financial intermediation sector -
The ESRB published a report on financial stability risks from linkages between banks and the non-bank financial intermediation (NBFI) sector. The report focuses on bank funding from NBFI entities and credit exposure to NBFI entities as well as banks’ derivatives exposures to NBFI entities. It finds linkages between banks and the NBFI sector to be significant, and while they do not currently pose acute risks to financial stability, they create important vulnerabilities that could amplify stress in adverse market conditions. Furthermore, these vulnerabilities are highly concentrated in a small number of large euro area global systemically important banks (G-SIBs). Risk-bearing capacity among euro area G-SIBs is key to absorbing shocks in the financial system and preventing the amplification of financial stress.
Please see full publication below for more information.
