The European Systemic Risk Board (ESRB), Financial Stability Board (FSB), and the European Banking Authority (EBA) of the European Union will evaluate the interdependence of banks and non-bank financial institutions (NBFIs), such as crypto platforms, hedge funds, and private equity.
In an interview with the Financial Times on December 3, José Manuel Campa, chairman of the EBA, declared the intention. Campa contends that to comprehend the magnitude of the potential contagion between banking and non-banking financial institutions during a crisis, the entire “underlying chain in NBFIs” must be traced.
“We should be doing more and we are going to be doing more. We need to have an understanding of the whole underlying chain in NBFIs.”
The executive disclosed that the EBA had previously evaluated the balance sheet exposures of banks to non-banks, which comprised loans. He considers NBFIs an “obscure sector” whose available data is ” homogeneous. “
The FSB estimates that the aggregate worth of assets NBFIs maintains approaches $218 trillion, representing approximately 46% of the total value of global assets. Traditional institutions, on the other hand, hold roughly $183 trillion.
The EBA established industry guidelines for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) within the cryptocurrency sector in November 2023.
The EBA specifically recommended consolidating the AML/CFT criteria about crypto asset service providers (CASPs) and payment service providers. It also proposed mandating CASPs to improve the interoperability of their protocols to “enable the transmission of information in a seamless and interoperable manner.”