FSB report: Global shadow banking assets exceed $25 trillion, regulatory vacuum raises concerns about systemic risks.

The latest data from the Financial Stability Board (FSB) shows that the global shadow banking system's assets have surpassed the $25 trillion mark for the first time, exacerbating concerns about the increasing systemic risks posed by the regulatory grey areas in the financial sector. The FSB's annual Global Monitoring Report shows that by the end of 2024, the total assets of non-bank financial institutions (including hedge funds, insurance companies, investment funds, etc.) reached a record high of $256.8 trillion, a 9.4% increase year-on-year. This group currently accounts for 51% of total financial assets, which is roughly in line with its share before the pandemic. Among non-bank financial institutions, trust companies, hedge funds, money market funds, and other investment funds saw the fastest growth, with their growth rates all reaching double digits. Meanwhile, according to FSB data, banking assets grew by 4.7%. FSB Chair and Governor of the Bank of England Andrew Bailey has previously pointed out the risks posed by non-bank institutions and stated that understanding their evolution will be an "important focus" for global regulatory bodies in assessing the resilience of the financial system. FSB officials express regret for the lack of relevant data on the growth of the multi-trillion-dollar private lending industry. Regulatory authorities are closely monitoring whether there are signs of weakness in this sector, with bank executives including Jamie Dimon of JPMorgan Chase and Axel Weber of UBS previously issuing warnings about vulnerabilities in the industry. FSB officials have stated that they have been attempting to collect information from eight major jurisdictions including Canada, Germany, Italy, Luxembourg, the Netherlands, Japan, Switzerland, and Hong Kong, but have found significant gaps in the existing data. The private lending activities reported by these jurisdictions amounted to only $0.5 trillion, a figure that FSB describes as "significantly lower than estimates calculated using commercial data." The report notes that "not all participating jurisdictions were able to provide data." Some jurisdictions only provided data for certain sectors, such as collecting information only on private lending funds and not on loans from insurance companies. FSB staff also point out that there is currently a lack of a global standard definition for private lending and finance, "making it difficult to identify private lending entities in statistical and regulatory reports." FSB's 2026 work plan includes addressing the data gaps in private lending.