The most significant remaining FSB concern relates to collective investment vehicles that are susceptible to runs.
The FSB assessment (PDF 929 KB) observes that a combination of regulatory measures and de-risking by (some) financial institutions has reduced considerably the financial stability risks posed by the shadow banking activities that contributed to the financial crisis. This includes most types of structured finance, banks’ use of special purpose vehicles, and the liquidity and maturity mismatches in money market funds. As a result, the shadow banking sector is generally less leveraged.
Elsewhere, however, risks to financial stability remain significant and in some cases are still growing. Here the FSB highlights:
In response, the FSB notes the importance of the effective implementation of the FSB’s January 2017 policy recommendations to address structural vulnerabilities from asset management activities. The International Organisation of Securities Commissions (IOSCO) is consulting on liquidity risk management in investment funds, and is looking to develop consistent leverage measures by the end of 2018.
Otherwise the FSB does not identify the need for any additional regulatory action at global level to deal with financial stability risks from shadow banking, although it does recommend some enhancements and strengthening of data collection and oversight.