IMFCEF

Webinar on Nonbank Financial Intermediaries: Vulnerabilities amid Tighter Financial Conditions

Joint CEF-Monetary & Capital Markets Department Webinar

Webinar on Nonbank Financial Intermediaries:

Vulnerabilities amid Tighter Financial Conditions Blurb

The International Monetary Fund-Middle East Center for Economics and Finance (IMF-CEF) and the IMF’s Monetary and Capital Markets Department held a joint webinar titled "Nonbank Financial Intermediaries: Vulnerabilities amid Tighter Financial Conditions" on Wednesday, June 7, 2023.

Mr. Mohamed Belhaj, Senior economist at the CEF, delivered opening remarks and moderated the event.  

Mr. Antonio Garcia Pascual introduced the topic, highlighting the growing risk to financial stability from non-bank financial intermediaries (NBFIs) in the US and Europe and the gaps in regulatory Data. Since the global financial crisis, the growth of the NBFI sector has accelerated, accounting for nearly 50% of global financial assets.

Mr. Thomas Piontek focused on vulnerabilities stemming from leverage, liquidity mismatches, and interconnectedness. He presented case studies, including stress in UK pension funds and Korean local debt markets, to illustrate how these factors interact and cause spillovers in the financial system.

Mr. Antonio Garcia Pascual highlighted policy issues noting that central banks should have appropriate tools to tackle turmoil in the NBFI sector. Policymakers need to narrow or eliminate gaps in regulatory reporting of key data, ensure NBFIs better manage risks, and support improvements in private sector risk management with appropriate prudential standards. If central bank intervention is needed, it can take three broad forms: discretionary market-wide intervention, lender-of-last-resort intervention, and access to standing lending facilities. Cooperation between domestic policymakers and international coordination between national authorities is also essential.

The floor then opened for a discussion during the Q&A session with a diverse audience from the Arab world, comprised of public sector officials, academics, and representatives of the business community, civil society, and other international organizations.