Shadow Banks in Focus

Investment funds, pension funds, insurers – what was once considered conservative asset management has developed into a huge, barely regulated banking system outside of banks. According to the new financial stability report by the IMF, these so-called non-banks (NBFIs) now hold around half of all global financial assets – and handle 50% of all currency transactions.

But their regulation is lagging far behind. "When non-banks come under stress, shocks are transmitted instantaneously to the core banking system," warns Tobias Adrian, Director at the IMF. According to simulations, even moderate losses could be sufficient to cause the capital ratios of numerous US and EU banks to fall by more than one percentage point.

When Funds Become a Risk

The collapse of the investment firm Archegos in 2021, which caused billions in losses for Credit Suisse, is regarded by the IMF as a warning example. Currently, hedge funds under the UBS umbrella also face losses in the triple-digit million range. The fund points to an "alarming interconnectedness" between traditional banks and alternative financial actors – and calls for stress tests, transparency obligations, and stricter liquidity rules.

Many shadow banks provide little information about their positions or credit risks," says Adrian. "This makes it almost impossible to identify systemic vulnerabilities at an early stage.

Europe plans, but has not yet acted

While Australia and Britain have already conducted system-wide stress tests, Europe is still at the beginning. The EU Commission is currently consulting market participants on possible measures. ESMA chief Verena Ross sees the need for action, but no urgent timeline: "This is a task for the future.

But the IMF is pushing. Because the shadow banking sector is particularly large in Europe - with an estimated 54 trillion euros in managed assets.

AI stocks as a new bubble risk

In addition to shadow banks, the IMF is also causing unrest due to the explosive valuations of AI stocks. The hype around Nvidia, Microsoft, Apple, and others has led to a dangerous market narrowness: The "Magnificent Seven" now account for one-third of the entire S&P 500.

If these corporations do not meet their high profit expectations, abrupt and severe price corrections threaten," the report says. Investor sentiment and market liquidity could then shift within days.

Gold rush mood with systemic risk

Even Industry Stars View the Development Critically

The IMF sees parallels to the internet bubble of the 2000s – with one crucial difference: This time banks, funds, and tech investors are even more intertwined.

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