The Financial Stability Board published remarks by its Secretary General, John Schindler, setting out a “sense and sensibility” approach to nonbank financial intermediation (NBFI) regulation, stressing that vulnerabilities and policy responses should be assessed at the level of specific entities and activities rather than treating “nonbanks” as a single category. The speech, which reflects the speaker’s views rather than those of the FSB or its members, argues that some bank-like tools can be appropriate where nonbank vulnerabilities resemble banking risks, but cautions against one-size-fits-all rules given the sector’s heterogeneity. The remarks highlight the growing systemic footprint of nonbanks, citing FSB monitoring that puts nonbanks at just over half of global financial assets as of 2024, around USD 260 trillion, and points to episodes where liquidity strains, leverage and margin dynamics amplified stress. Examples included money market fund and investment fund liquidity pressures in March 2020, procyclical margin calls and liquidity demands, reliance on short-term repo leverage including arrangements with no haircuts, commodity-derivatives margin strains after Russia’s invasion of Ukraine, the Archegos collapse and associated prime brokerage risk management issues, and the September 2022 UK gilt turmoil involving liability-driven investment funds that required Bank of England intervention. Schindler also addressed recurring misconceptions encountered in FSB outreach and consultations, including that financial stability regulation necessarily undermines nonbanks’ economic role, that all nonbanks pose significant systemic risk, and that the absence of depositors should preclude bank-like measures even where products such as money market funds can be close substitutes for deposits. Looking ahead, the speech frames the FSB’s work programme around improving liquidity resilience in money market funds and open-ended funds, implementing and following up on nonbank leverage recommendations made in 2025 alongside efforts to close data gaps, strengthening risk management practices, and advancing transparency and cross-border data and information sharing. It also flagged an upcoming FSB report on repo markets and reiterated the need for international coordination on NBFI-related financial stability risks.

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