The International Monetary Fund (IMF) has expressed concern about the rising influence of non-bank financial institutions (NBFIs) on global financial stability.
In its Global Financial Stability Report (GFSR), launched at the 2025 IMF/World Bank spring meetings in Washington DC, the IMF called on Central Banks to tighten regulations on non-bank financial institutions.
The lender also called for “improved” regulation of the NBFIs, stressing the increased exposure of banks to them.
The NBFI’s, said to cover a broad array of intermediation activity, include insurance companies and pension funds.
They also include investment funds (mutual funds, exchange-traded funds, hedge funds, private equity, and private credit), and finance companies.
“As we move into new analysis in this April 2025 GFSR, we highlight the growing role of nonbank financial intermediation (NBFI) and the increased exposure of banks to NBFIs.
“The linkages between banks and nonbanks have been growing, increasing the NBFI’s influence on systemwide financial stability.
“In light of these considerations, improving the regulation of NBFIs should remain a priority.”
The fund acknowledged that important advances have been made to reinforce the soundness of NBFIs.
The progress, the IMF said, includes reforms to money market funds, limits to liquidity risks in mutual funds, margin-setting in central counterparties, counterparty risk management practices for broker-dealers, and trading rules in exchanges and electronic trading platforms.
The Fund also urged countries grappling with unsustainable public debt to make tough but necessary decisions to restore debt sustainability.
Speaking at the 2025 IMF/World Bank Group Spring Meetings, IMF Managing Director Kristalina Georgieva announced plans to introduce a structured guide for countries undergoing debt restructuring, while continuing efforts to stabilize their economies.
“Countries with unsustainable debt should act proactively to address these challenges, including making the difficult choice to pursue debt restructuring when necessary. I’m pleased to announce that the Global Sovereign Debt Roundtable will soon publish a playbook to support country authorities in their decision-making process,” she said.
She further advised emerging market economies to maintain exchange rate flexibility as a buffer against economic shocks.
“Policymakers can look to the IMF’s Integrated Policy Framework for insights into how and when temporary measures may be warranted,” she added.
Georgieva reiterated the need for vigilance from central banks in managing inflation expectations and emphasized safeguarding both banking and non-banking financial institutions.
“Central bankers must keep an eagle eye on the data—including higher inflation expectations in some cases, or falling inflation in others. In finance, strong regulation and supervision remain essential to keep banks safe, and rising risks from non-banks must be monitored and contained,” Georgieva emphasized.
ENDS