Going beyond systemic financial firms, it is necessary to develop appropriate macroprudential tools to address the systemic risk of the remaining non-bank financial system. This is in the spirit of what has been done for the banking sector, where a range of policy tools is now available to address risks to banks from developments in specific markets and activities.
The FSB’s work on asset management goes in this direction and shows the road ahead. The build-up of leverage and the growing exposure to illiquid assets in the asset management sector are clearly relevant developments for macro-prudential supervisors. These need to be carefully monitored and assessed. However, macro-prudential policy cannot stop at this point.