With an outstanding credit balance of €1.7 trillion and growth of 7.1% last year, AEB banks have reached an all-time high and have become key to driving economic growth and prosperity in the countries where, as in the case of Spain, they operate and where bank financing predominates among households and businesses.
There is a complementary modality to bank financing, which is that provided by non-bank financial intermediaries (NBFIs). This non-bank credit has experienced noteworthy growth over the last decade, representing 50% of financial assets worldwide. Behind this growth is greater regulation and strict supervision of banks compared to these intermediaries, in a context characterized by very expansive monetary conditions from central banks.
Financial markets, accustomed to historically low and even negative interest rates as occurred in Europe, are now adjusting to a return to normal monetary policy and to the slowdown of the global economy.
A few days ago, the IMF warned about the high financial vulnerabilities accumulated by the non-bank financial industry in that environment of low interest rates, compressed volatility and high liquidity; concerned about the combination in the current scenario of episodes of low liquidity and high debt.
The IMF’s assessment of this situation is twofold: on the one hand, supervision, regulation and monitoring of NBFIs are necessary. On the other, coordination between central banks and financial sector regulators must be strengthened. In conclusion, it is necessary to preserve banks’ stability in order to maintain the flow of financing the economy requires.
José Luis Martínez Campuzano, spokesperson for the Spanish Banking Association
