The world’s $87 trillion asset management industry is getting riskier and echoes some of the “too big to fail” risks already being addressed at banks, Bank of England director of financial stability Andy Haldane said on Friday.
In a speech likely to leave the funds sector bristling, Haldane said some recent trends in activities raise the question whether funds can also be “too big to fail”, meaning they need curbs to avoid a failure wreaking havoc in markets and requiring a potential bailout by taxpayers.
The sector is already lobbying intensively against draft plans by the Financial Stability Board, the regulatory arm of the Group of 20 economies (G20) to designate funds over $100 billion as systemically important and therefore subject to as-yet undetermined extra supervisory requirements.
Haldane said assets in the fund management sector are currently estimated at about $87 trillion globally and could rise to $400 trillion by 2050 as populations expand and get older and richer.
In Britain, the sector has grown from under 50 percent to over 200 percent of gross domestic product since 1980.
