🏦 Nonbank Financial Intermediation Policy Issues and Financial Stability (NotebookLM).

This Congressional Research Service (CRS) report, updated in June 2025, provides an overview of Nonbank Financial Intermediation (NBFI), or “shadow banking,” and its implications for capital markets policy, prepared for Members of Congress. The source explains that NBFI generally refers to funding sources outside the traditional banking system, emphasizing its size, complexity, and importance, noting that nonbank financial assets in the U.S. are significantly greater than those held by banks. The report examines various policy issues and vulnerabilities within capital markets NBFI, focusing on risks such as “runnable” behavior in instruments like Money Market Mutual Funds, the use of leverage, and the interconnectedness between nonbanks and banks, including specific market events like the Archegos fallout. It also discusses challenges related to liquidity mismatch, data and transparency gaps (such as with the Consolidated Audit Trail project), and the differing regulatory philosophies between banking and securities oversight.