MNI BRIEF: FSB's Knot Says NBFI Reforms May Be Losing Momentum

The global finance system’s top regulator warns Monday that reforms to address vulnerabilities in non-bank financial intermediation are losing steam, while many of the underlying vulnerabilities that contributed to stress in the NBFI sector during recent market crises are still largely in place.

The Financial Stability Board Chair Klaas Knot wrote in a letter to G20 finance ministers and central bankers published Monday that historically high debt levels of both government and private sector borrowers and vulnerabilities in real estate markets and NBFI are areas that deserve continuing attention. "While some progress has been made to date, the pace of implementation of agreed NBFI policies (e.g. money market reforms) has been uneven across jurisdictions and we may already be losing momentum," Knot said. (See: MNI INTERVIEW: Coordination Needed On Non-Banks - Irish Deputy)

"Concerns over the outlook for global financial stability are gradually abating" and while "optimism over a soft landing for the global economy grows, it is important to emphasise that tail risks remain, Knot added". The G20 is meeting on 25-26 July.