Shadow banking assets grew by an estimated $5 trillion in 2012 to a total of $71 trillion, mainly due to the general rise in financial markets, according to the Financial Stability Board (FSB).
In its third annual survey of the world of shadow banking, which has been expanded to include hedge funds along with insurance companies, pension funds and public financial institutions, the FSB said the rise last year measured on a broad basis amounted to 8.1 percent, up from an 0.6 percent rise in 2011.
In general, shadow banking - or non-bank financial intermediaries - forms a large proportion of financial systems in advanced economies and was largely stable last year but the FSB said shadow banking had grown strongly in emerging markets, up by over 20 percent, though from a small base.
In China, for example, shadow banking assets grew by 42 percent in 2012 while in Spain they shrunk by 11 percent, the FSB said.
The rise in shadow banking assets last year is in contrast with the banking system where assets were relatively stable as the effect of higher asset values was counterbalanced by shrinking balance sheets.
Globally, the assets of the shadow banking system represents an average of some 24 precent of total financial assets, about half of banking system assets and 117 percent of the Gross Domestic Product of the 25 jurisdictions and the euro area as a whole that were monitored by the FSB.
Among the various sectors within shadow banking, the FSB said real estate investment trusts and funds grew the fastest, or by 30 percent, while other investment funds grew 16 percent and the assets of hedge funds grew by 11 percent.
For the first time, the FSB also sought to use more detailed data available from 20 jurisdictions to filter out non-bank activities that have no direct relation to credit intermediation or that are prudentially consolidated into banking groups.
Using these more "granular data," the FSB said shadow banking was estimated at $35 trillion compared with an estimate of $55 trillion using the broader basis. For this smaller sample, the growth rate in 2012 was 2.9 percent.
The Swiss-based FSB, which coordinates global financial regulation and brings together authorities from 24 countries and jurisdictions, aims to strengthen the oversight and regulation of the shadow banking system. The monitoring exercise helps the FSB identify the risk to financial stability from shadow banking due to the use of leverage, maturity and liquidity transformation.
"Improving bank regulation is not enough to fully address the weaknesses of the financial system revealed by the crises," said Agustin Carstens, chairman of the FSB Standing Committee on Assessment of Vulnerabilities.
"The shadow banking system continues to transform and innovate," added Carstens, who is also governor of the Bank of Mexico.
In August the FSB published policy recommendations to strengthen the oversight and regulation of shadow banking, aiming to reduce the overall risks to financial stability while still allowing the evolution of some of the system's financial models that do not pose any risks.
The FSB's proposals included minimum haircuts for securities financial transactions.