When we look at financial stability concerns in non-banks, we are looking less at the risk-bearing capacity of the individual institution’s balance sheet and more at the potential for contagion and shock amplification through the system and amplification of the broader financial cycle. So the key risks that we look at relate to liquidity, leverage, procyclicality and interconnectedness.
A macroprudential framework for non-banks would need to identify and address the key fragilities and externalities stemming from the non-bank sector, and provide the appropriate tools for authorities to achieve this in an efficient and effective manner. Such a framework should support the beneficial role that non-banks play in financial intermediation and ensure the sustainable development of non-bank financing.