Non-banks pose hidden stability risks – Fed research
Credit lines to NBFIs are off firms’ balance sheets, thereby concealing potential hazards, say authors
The increase in credit lines from banks to non-bank financial institutions (NBFIs) could amplify vulnerabilities in the financial system and pose stability risks, according to research from the Federal Reserve.
The study, published on July 14, says the “complex interdependencies” between banks and NBFIs are a source of concern.
The authors, Ricardo Duque Gabriel and Julianna Sterling, say NBFIs such as insurance companies and broker-dealers “have increasingly taken on roles traditionally
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