Sunday

18th Feb 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.

Baltic states demand bigger EU budget

The leaders of Estonia, Latvia, and Lithuania say in a joint letter that they are open to talks on creating "new own resources" for a bigger EU budget after the UK leaves the EU.

EU-Latin America trade talks move to 'endgame'

Senior negotiators in the EU-Mercosur talks will meet in Brussels on Friday to work out the technical bits of a possible trade deal, after top political officials gave the talks a final push.

News in Brief

  1. Merkel: Nord Stream 2 pipeline poses 'no danger'
  2. Spanish king in Barcelona next week
  3. Turkey jails journalists for life
  4. Make budget cuts in farm and regional funds, the Dutch say
  5. UN: Hungary's anti-migration bill is 'assault on human rights'
  6. Journalist Deniz Yucel freed in Turkey
  7. New organic farming bill not ready until late spring
  8. Commissioner: Western Balkans in EU is 'obvious'

Stakeholders' Highlights

  1. International Partnership for Human RightsUzbekistan: Investigate Torture of Journalist
  2. EPSUMovie Premiere: 'Up to The Last Drop' - 22 February, Brussels
  3. CESICESI@Noon on ‘Digitalisation & Future of Work: Social Protection For All?’ - March 7
  4. UNICEFExecutive Director's Committment to Tackling Sexual Exploitation and Abuse of Children
  5. Nordic Council of MinistersState of the Nordic Region 2018: Facts, Figures and Rankings of the 74 Regions
  6. Mission of China to the EUDigital Economy Shaping China's Future, Over 30% of GDP
  7. Macedonian Human Rights Movement Int.Suing the Governments of Macedonia and Greece for Changing Macedonia's Name
  8. Dialogue PlatformBeyond the Errors in the War on Terror: How to Fight Global Militarism - 22 February
  9. Swedish EnterprisesHarnessing Globalization- at What Cost? Keynote Speaker Commissioner Malmström
  10. European Friends of ArmeniaSave The Date 28/02: “Nagorno-Karabakh & the EU: 1988-2018”
  11. European Heart NetworkSmart CAP is Triple Win for Economy, Environment and Health
  12. European Free AlllianceEFA Joined the Protest in Aiacciu to Solicit a Dialogue After the Elections

Latest News

  1. EU asks charities to explain anti-abuse measures
  2. ECB, Budget, EU elections This WEEK
  3. EU states stay mute on implementation of mercury bill
  4. Baltic states demand bigger EU budget
  5. Germany raises concerns over Hungary's 'Stop Soros' bills
  6. EU ties Brexit transition talks to divorce agreement
  7. EU divided over Western Balkan enlargement
  8. Facebook and Twitter weak on protecting users, says EU