Tuesday 21 November 2017

Ireland has world's fourth largest shadow banking sector, hosting €2.02 trillion of assets

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Donal O'Donovan

Donal O'Donovan

Ireland is home to the world’s fourth biggest shadow banking sector, hosting around $2.2 trillion (€2.02) of financial assets held by funds, special-purpose companies and so called securitisation structures.

Shadow banking refers to large scale financial institutions and money managers other than traditional banks.

The sector is responsible for providing an increasingly large share of global credit. 

In Ireland it is concentrated in the IFSC, where funds ultimately owned and often controlled elsewhere are administered and managed, but, according to separate research by the Central Bank of Ireland, a significant level of Irish shadow banking reflects treasury management functions within multinational corporations based here.

 The US, followed by the Cayman Island and then Japan have the greatest concentrations of shadow banking assets, according to a report by the global Financial Stability Board. Ireland is next - although Luxembourg, a major financial administration centre is not included in the data.

 In the Eurozone, including Ireland, the funds industry is increasingly plugging gaps that were once monopolised by banks - including lending to property developers, car buyers and small firms.

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