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The Financial Stability Board (FSB) published its annual progress report to the G20 on enhancing the resilience of non-bank financial intermediation (NBFI).
The report presents findings of analytical work on vulnerabilities in particular entities and activities that may contribute to aggregate liquidity imbalances. It also describes policies being developed by the FSB and standard-setting bodies (SSBs) to reduce excessive and potentially destabilising spikes in liquidity demand, focusing on structural liquidity mismatch in open-ended funds and on margining practices.
The report stresses the importance of ensuring that the various policies fit together from a system-wide perspective and warns that until these policies are finalised and fully implemented, the vulnerabilities evident in recent market incidents remain. The report outlines further work to assess and address systemic risk in NBFI that the FSB and SSBs will carry out.
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