Monday

25th Jun 2018

EU shadow banking assets worth €17 trillion

  • Shadow banking system in the UK had €7 trillion in assets in 2011. (Photo: J. A. Alcaide)

The eurozone has the world's second largest shadow banking system after the United States, with assets worth some €17.2 trillion in 2011.

"The US' share of the global shadow banking system has declined from 44 percent in 2005 to 35 percent in 2011. This decline has been mirrored mostly by an increase in the shares of the UK and the euro area," said the Basel, Swizterland-based Financial Stability Board (FSB) in a report released on Sunday (18 November).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

The UK takes the largest share in Europe with €7 trillion, while the US, in comparison, has €18 trillion.

The FSB, which monitors international financial sector policies, says such credit transactions "made outside the normal banking system" have continued to increase in size after the 2008-11 financial crisis.

The transactions are often unregulated and present higher risks when compared to traditional banking activities.

Companies involved in shadow banking specialise in anything from capital venture, securities markets, pension and mutual funds.

In some cases, they represent a significant share of financial activities when compared to standard commercial banks.

Also known as non-bank financial institutions (NBFIs), shadow banking companies compete with the commercial banks in areas like providing credit to small businesses.

“The Netherlands (45 percent) and the US (35 percent) are the two jurisdictions where NBFIs are the largest sector relative to other financial institutions in their systems," says the FSB.

The NBFIs in the eurozone, for its part, is around 30 percent.

The assets generated from such institutions are large. For the eurozone, they represent 111 percent of its total GDP.

In the UK, it is the equivalent of 370 percent of its GDP, while the Netherlands tops out at 490 percent.

"Part of this concentration can be explained by the fact that these jurisdictions are significant international financial centres that host activities of foreign-owned institutions," notes the FSB.

Overall assets in the global shadow banking system had seen a rapid increase just before the crisis, rising from €20 trillion in 2002 to €48.5 trillion in 2007.

The total then declined to €46 trillion in 2008 "but increased subsequently to reach €52.5 trillion in 2011."

Agenda

G20 and Syria top the bill THIS WEEK

EU politicians will return from their summer holidays to a week dominated by the G20 summit and by the Syria crisis.

EU clamps down on shadow banking

EU commissioner Barnier has laid out plans to regulate the shadow banking sector, seen as playing a major role in the 2008 financial crisis.

Greece and creditors proclaim 'end of crisis'

After late-night talks, the Eurogroup agreed on a €15bn disbursement and debt relief measures for Greece, while setting out a tight monitoring when the bailout ends in August.

Greek bailout exit takes shape

At a meeting next week, eurozone finance ministers and the IMF are expected to agree on new cash, debt relief measures, and a monitoring mechanism to ensure that Greece can live without international aid for the first time since 2010.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

Stakeholders' Highlights

  1. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  2. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  3. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  4. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  5. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  6. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  7. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  8. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  9. Mission of China to the EUChina: Work Together for a Better Globalisation
  10. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  11. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  12. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform

Latest News

  1. Orban allies divided in vote on Hungary sanctions probe
  2. Rutte - from 'Mr No' to 'next Tusk'?
  3. UN offers to help EU's migrant 'disembarkation' plan
  4. Progressive CAP alternative only hope for sustainability
  5. Ponytailed green MEP joins 'the other side of the table'
  6. EU leaders still in search of migration plan
  7. Migration row at centre of EU summit This Week
  8. Merkel's woes cast shadow on EU's future

Join EUobserver

Support quality EU news

Join us