IMF tells UK to plug gaps in fast growing 'non-bank' sector – Reuters.com

The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S. REUTERS/Yuri Gripas
LONDON, Dec 14 (Reuters) – Britain needs to plug data and monitoring gaps in its fast growing 'non-bank' sector where liquidity during market crises could be helped by having access to government bond operations, the International Monetary Fund said on Tuesday.
Non-banks comprise hedge funds, mutual funds, pension funds, money market funds and insurance companies, which collectively now account for half of global financial activity. read more
Britain is a global financial hub whose non-banking sector has grown significantly, said Udaibir Saran Das, adviser and deputy director of Monetary Capital Markets at the IMF.
"That is something we have flagged with some sense of urgency to the UK authorities, that there are data gaps that need to be plugged, the perimeter of surveillance… needs to be broadened," Saran Das told a news conference on the IMF's latest assessment of Britain's economy and financial sector.
"It's no longer just the UK's problem, this thing has become very much an international issue."
The Bank of England, like its counterparts in the United States and the euro zone, injected liquidity into markets as economies went into lockdown in March 2020 to fight COVID-19, creating a "dash for cash".
Intervention prevented money market funds and other market participants from freezing up, but regulators globally are looking at what measures can be taken to avoid having to do the same again in the next market crisis.
"Meanwhile the authorities should strengthen backstops to the functioning of core markets in times of stress by considering allowing appropriately regulated, large, interconnected non-bank financial intermediaries access to repo and/or Gilt purchase operations," the IMF said.
In response, the BoE said its Financial Policy Committee had expressed strong support on Monday for global efforts in the coming year to develop policies to address vulnerabilities in market-based finance, otherwise the risks exposed at the start of the lockdowns in March 2020 would persist.
The IMF said the financial cycle in Britain appeared to be slightly ahead of the economic one, and it called for continuing "assiduous macroprudential and supervisory vigilance".
It welcomed the BoE's decision on Monday to require banks to build up their "rainy day" capital buffers, adding that Britain had made "major strides" in laying out its post-Brexit financial sector frameworks.
Post-Brexit, it will be important for regulators to preserve the primacy of financial stability objectives, the IMF said.
Britain's finance ministry has proposed that UK regulators have an objective of maintaining the competitiveness of the financial sector, a proposalwhich raised concerns at the BoE about a possible return to lighter-touch regulation.
Our Standards: The Thomson Reuters Trust Principles.
JPMorgan Chase & Co has reduced lending to China's Tsingshan, one of the world's top nickel producers, while also paring back credit to other customers in Europe and Asia after a review of risk, sources close to the situation said.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2022 Reuters. All rights reserved

source

Leave a Comment