Shadow Banking Hits $250 Trillion as Watchdog Raises Data Concerns
Global assets in the expansive shadow banking sector have surpassed the $250 trillion threshold for the first time, according to new data, raising concerns about increasing systemic risks from the less regulated areas of the financial sector. The FSB’s annual global financial monitor reveals that non-bank financial institutions — encompassing hedge funds, insurers, investment funds, and more — reached a record $256.8 trillion in assets by the end of 2024, reflecting a 9.4 per cent increase year-on-year. The group currently represents 51 percent of total financial assets, akin to its share prior to the pandemic.
Among non-banking entities, trust companies, hedge funds, money market funds, and other investment funds experienced the most rapid expansion, all recording double-digit growth rates. The assets of the banking sector experienced a growth of 4.7 per cent, as per reports, which gathers finance officials from 24 jurisdictions. FSB chair and Bank of England Governor Andrew Bailey has previously highlighted the risks associated with non-banks, stating that understanding their evolution would be a “important focus” as global watchdogs evaluate the resilience of the financial system.
The FSB expressed concern over the insufficient data regarding the expansion of the multi-trillion dollar private credit industry, a sector that regulators are closely monitoring for indications of fragility, following alerts from banking leaders such as JPMorgan Chase’s Jamie Dimon and UBS’s Colm Kelleher. Officials reported that they endeavored to gather information on eight major jurisdictions — Canada, Germany, Italy, Luxembourg, the Netherlands, Japan, Switzerland, and Hong Kong — but encountered substantial gaps in the data accessible.
Those jurisdictions reported only $0.5 trillion of privatGlobal Assetse credit activity, which the FSB noted was “much lower than other estimates calculated with commercial data.” The report noted, “not all participating jurisdictions were able to provide data.” Some provided data exclusively on a segment of the industry, focusing solely on private credit funds while neglecting to include information on lending by insurers. The FSB staff highlighted the lack of a universal definition for private credit and finance, stating that it “rendered it difficult to identify private credit entities in statistical and regulatory reports.” The FSB’s 2026 work programme encompasses the task of addressing data gaps in private credit.
