According to Odaily, the Financial Stability Board (FSB), the world's leading financial stability regulator, is forming a dedicated task force to identify areas where shadow banking could trigger broader crises. FSB Chairman Klaas Knot highlighted carry trades and basis trades as key areas of focus, noting their potential for rapid leverage accumulation. Basis trades, known for their trillion-dollar bets on U.S. Treasury bonds, yield small profits per trade, encouraging extensive borrowing and increasing potential risks. The unpredictability of U.S. economic policies has also heightened the risks associated with arbitrage trades.
The FSB faces challenges in determining what data various regulators overseeing non-bank financial institutions already possess, what additional data can be obtained, and what information can be shared. Knot emphasized that the first step is ensuring that national regulators have the necessary data to understand financial stability risks. He expressed a goal of making significant progress by 2025, with the task force being led by a "strong chairman," though specific details were not disclosed.