Sunday

22nd Apr 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).

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

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.

Macron and Merkel pledge euro reform

France and Germany have pledged to forge a joint position on euro reform by June, despite German reluctance on deeper monetary union.

News in Brief

  1. Audit office: Brexit 'divorce' bill could be billions higher
  2. MEPs urge better protection for journalists
  3. Dieselgate: MEPs back greater role for EU in car approvals
  4. European parliament adopts new organic farming rules
  5. EU granted protection to half million people in 2017
  6. Report: Facebook to carve 1.5bn users out of EU privacy law
  7. Greek court ruling permits migrants to travel to mainland
  8. Commonwealth summit hopes for trade boost after Brexit

Stakeholders' Highlights

  1. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  2. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  3. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  4. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  5. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  6. UNICEFCalls for the Protection of Children in the Gaza Strip
  7. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  8. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight
  9. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  10. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  11. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  12. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia

Latest News

  1. ECJ ruling set to end 10-year 'mouth tobacco' lobbying saga
  2. Whistleblowers, Syria and digital revolution This WEEK
  3. MEP friendship groups offer 'backdoor' for pariah regimes
  4. Macron and Merkel pledge euro reform
  5. Obscurity surrounds EU military fund's expert groups
  6. New EU party finance rules short circuit accountability
  7. Draghi to stay in secretive 'lobby' group
  8. Bulgaria offers lesson in tackling radical-right populists