Assets in the riskiest part of the world's nonbank financial system grew by 7.6% in 2016 to $45.2 trillion, equivalent to 13% of the global financial system, the Financial Stability Board said.
The increase, detailed in FSB's Global Shadow Banking Monitoring report, represents an expansion in the "narrow measure" of shadow banking: entities involved in practices that could pose stability risks. The report was based on data for jurisdictions representing 80% of the world's GDP.
Nearly three quarters of the narrow measure is composed of collective investment vehicles with features that make them susceptible to runs — such as open-ended fixed-income funds and money market funds. Assets in this area expanded by 11%. On average, they have been growing 13% per year since the end of 2011.
A broader definition of shadow banking — including all financial institutions that are not central banks, banks, insurance corporations, pension funds, public financial institutions or financial auxiliaries — climbed to $99 trillion in assets, or 29.2% of the total financial system, the FSB said. That 8.0% growth rate outpaced the 7.5% rise in total global assets.
Deposit-taking banks' share in the financial system declined for the fifth year in a row to 40.5% in 2016, with a more pronounced slowdown in the euro area. Insurance companies made up 8.6%, and pension funds composed 9.1% of the total.
