European Systemic Risk Board says data coverage of Shadow Banking “hampers activity-based monitoring”

The European Systemic Risk Board (ESRB) has today published the EU Shadow Banking Monitor 2018 which covers data up to end-2017. This is the third issue in an annual series that contributes to the monitoring of a part of the financial system that has grown in recent years and, while little changed in 2017, now accounts for around 40% of the EU financial system. While the size of the shadow banking system is important for monitoring purposes, it is not, in itself, a measure of risks and vulnerabilities.

The report also highlights important data gaps in some parts of the shadow banking system, which prevent more comprehensive risk assessment. Despite recent advances in statistical coverage, e.g. in respect of financial corporations engaged in lending (FCLs), almost half of EU shadow banking assets are held by financial institutions for which a more detailed entity-type breakdown is not available for the EU as a whole. This lack of classification by entity type hampers activity-based monitoring at the EU level, as granular data at transaction level cannot always be mapped to the types of entities engaged in these trades.

The full report is available at https://www.esrb.europa.eu/pub/pdf/reports/esrb.report180910_shadow_banking.en.pdf

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