ECB’s Makhlouf: Need Global Coordination to Address Non-Bank Sector Risks

15 April 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – The growing importance of the non-bank sector calls for more global cooperation to address possible risks to the financial system, European Central Bank Governing Council member Gabriel Makhlouf said on Monday.

Speaking at a panel during the spring meetings of the IMF and World Bank, Makhlouf, who heads the Central Bank of Ireland, said that the non-bank sector 'is playing an increasingly important role in the global financial system and real economy, and is also becoming a more important source of finance in Ireland. This can bring many benefits and support economic growth, but it can also generate, in certain circumstances, risks to the financial system'.

Episodes of the past demonstrated the capacity of the funds sector to worsen negative shocks, a risk calling for a macroprudential perspective and collaboration among relevant authorities, he said.

‘Global and European coordination is needed here. The existing regulatory framework provides a good starting point, but it has not been designed for this purpose and we know that the solutions cannot be "one-size-fits-all"’, he said.