The European Banking Authority (EBA), the regulator that conducts stress tests on EU banks, will take additional steps to forecast how stresses at non-bank financial institutions (NBFIs), including crypto-related entities, will affect lenders, according to a report. Financial Times.
Concerns about contagion have led to the need to “dig deeper into the links between banks and other financial companies,” José Manuel Campa, president of the European Bankers Association, said in an interview with the Financial Times. “We must do more and we will do more. We need to understand the entire fundamental chain in non-bank financial institutions.”
According to a Financial Times report, non-bank financial institutions own about $219 trillion, nearly half of the world's financial assets.
The European Banking Agency conducts stress tests every two years on European lenders and assessments of banks' balance sheet exposure to non-banks, Campa said. The final step would be to work with the European Systemic Risk Board and the Financial Stability Board to understand the effects of the “shadow banking shock” on the broader system, the report said.
