Multi-trillion dollar non-banking finance saw its first major retreat last year since the global financial crisis in 2009, with the shrinkage due to higher interest rates hitting asset valuations, a global watchdog said on Monday.
Non-banks, such as investment funds and insurers, have come under closer regulatory scrutiny after the sector, less regulated than banks in parts, grew sharply after the financial crisis as money shifted from the more heavily regulated lenders.
This shift raised worries about hidden pockets of leverage and “liquidity mismatches” at money market funds and elsewhere that could hit financial stability in a crisis through interlinkages between banks and non-banks.
Read More : Global Non-Bank Sector Experiences Significant Retreat Amidst Higher Rates