Global shadow banking assets rose to a record $75 trillion (£46.5 trillion) last year, new analysis shows. The value of risky investment products, mortgage-backed securities and other non-bank entities increased by $5 trillion to $75 trillion in 2013, according to the Financial Stability Board (FSB). Shadow banking, which is not constrained by bank regulation, now represents about 25pc of total financial assets - or roughly half of the global banking system. It is also equivalent to 120pc of global gross domestic product (GDP). The FSB, which monitors and makes recommendations on financial stability issues, said that while non-bank lending complemented traditional channels by expanding access to credit, data inconsistencies together with the size of the system meant closer monitoring was warranted. "Intermediating credit through non-bank channels can have important advantages and contributes to the financing of the real economy; but such channels can also become a source of systemic risk, especially when they are structured to perform bank-like functions and when their interconnectedness with the regular banking system is strong," the FSB said in its annual shadow banking report.
Ultimately some of this money leaks into physical assets and we will see tremendous inflation and asset bubbles. The money creation is all being retained in the banking system whilst M2 money supply is crashing to record lows. All the economic meters are going into the red except GDP growth because that is funded by debt funded by money printing which is fueling the distortion in our financial system. Even the IMF is ringing the fire alarm.
Economically this is a fascinating experiment with FIAT money which has not been around that long compared to its predecessor (asset backed currency) invented by Sir Isaac Newton as Master of the Royal Mint. This shadow is 120% of Global GDP haha and `no systemic risk`. They just type figures into a computer and call it money. No one understands this and no one can explain what it means... It`s like trying to regulate the Sun while flying like Icarus...Granular data from 23 countries which stripped out assets not related to credit intermediation - or taking money from savers and lending it to borrowers - showed the size of the shadow banking system stood at $34.9 trillion in 2013, compared with $34 trillion in 2012. Under this measure, growth of shadow banking in China was even larger than under the headline measure, rising by 40pc in 2013 to $2.7 trillion. The FSB data follows a report by the International Monetary Fund this month which urged regulators to do more to police activity in the non-bank sector. The FSB and IMF said more data were needed to conduct in-depth healthchecks of the sector.
Economically this is a fascinating experiment with FIAT money which has not been around that long compared to its predecessor (asset backed currency) invented by Sir Isaac Newton as Master of the Royal Mint. This shadow is 120% of Global GDP haha and `no systemic risk`. They just type figures into a computer and call it money. No one understands this and no one can explain what it means... It`s like trying to regulate the Sun while flying like Icarus...Granular data from 23 countries which stripped out assets not related to credit intermediation - or taking money from savers and lending it to borrowers - showed the size of the shadow banking system stood at $34.9 trillion in 2013, compared with $34 trillion in 2012. Under this measure, growth of shadow banking in China was even larger than under the headline measure, rising by 40pc in 2013 to $2.7 trillion. The FSB data follows a report by the International Monetary Fund this month which urged regulators to do more to police activity in the non-bank sector. The FSB and IMF said more data were needed to conduct in-depth healthchecks of the sector.
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