BCBS report on interconnections between banks and NBFIs

The Basel Committee on Banking Supervision (BCBS) has released a horizon-scanning report examining the interconnections between banks and non-bank financial intermediaries (NBFIs). The report discusses trends shaping bank-NBFI linkages, identifies key activities linking banks and NBFIs, covering leverage, clearing, market-making and underwriting services, and discusses the potential systemic risks arising from these interconnections. Drawing on case studies and stylised scenarios, the report demonstrates how failure in NBFIs could affect the banking system and broader financial stability. The report also identifies data gaps and limitations, emphasising the importance for granular, timely and high-frequency data to effectively monitor these interconnections. The BCBS intends to continue its assessment of these interconnections, with particular attention to synthetic risk transfers, to better understand their associated benefits and potential risks.

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