Luxembourg, the home of European Commission President Jean-Claude Juncker and of the European Union’s biggest fund industry, remains in the shadows.

The grand duchy didn’t contribute to the Financial Stability Board’s annual study of global trends and risks in shadow banking, the non-bank lending that helped trigger the 2008 credit crisis. Twenty-eight other countries including Singapore, Brazil and even the Cayman Islands — long a byword in secretive offshore finance — contributed data to the regulators’ review of efforts to transform risky shadow banking into “resilient market-based finance.”

Regulators from the U.S. Federal Reserve to the Central Bank of Ireland have been trying to better understand the risks posed by shadow banking since the network of complex, lightly-regulated entities helped cause the 2008 crash. The FSB, tasked by the Group of 20 nations to monitor everything from securitization vehicles to credit hedge funds, has cited data gaps as one of its challenges.

The FSB’s methodology involves first a broad examination of all non-bank credit intermediation, which then tightens its focus to a subset called the “narrow measure of shadow banking.” This is based on five “economic functions,” each potentially posing risks to financial stability.

The narrow measure rose 3.2 percent to $34 trillion in 2015, equivalent to 69 percent of the economic output of the 27 jurisdictions contributing to that gauge, the highest since at least 2002. China, which contributed figures to the broader measure, didn’t supply the data required for the narrow measure in time for publication.

Luxembourg, the EU’s second-smallest state, is one of the political bloc’s biggest hubs for non-bank lending, hosting investment funds with about 3.8 trillion euros of assets, according to European Central Bank data.

The nation, which is angling to become the seat of the European Banking Authority when the regulator relocates from London, is also home to about 1,100 securitization vehicles, about double the amount before the 2008 crisis, according to a PricewaterhouseCoopers report.

The FSB, chaired by Bank of England Governor Mark Carney, is in talks with Luxembourg in a bid to secure the country’s participation next year, people familiar with the matter said. The Luxembourg finance ministry didn’t immediately respond to a call and email seeking comment.

Poor, or missing, data is a recurring theme in the FSB’s work. During the financial crisis, the authorities discovered that they didn’t know who owned what securities on what terms nor who had lent them the money to make the deals. Since then, they have been racing to close the gap. The Cayman Islands and Belgium agreed to submit data for the first time this year while Ireland began taking part for last year’s report, the studies show.

New Method

The BoE is working on a new research method that “re-constructs the whole universe of financial entities authorized to operate in the U.K.,” according to the report. This “bottom-up” approach uses regulatory data gleaned from authorizations, as well as company accounts, supplemented by data from industry associations.

The approach “aims to capture the whole population of financial entities, rather than relying on sample data,” the FSB said.

Credit extended by investment funds that have features that may make them vulnerable to runs, such as open-ended fixed income funds, credit hedge funds, real estate funds and money-market funds, made up 65 percent of the narrow measure, the FSB said. These funds have grown their assets by about 10 percent annually on average over the past four years and have prompted efforts by regulators to subject them to bank-style prudential rules.

Loan intermediaries such as finance companies that depend on short-term borrowings or secured funding of client assets grew 2.5 percent in 2015 and make up 8 percent of the narrow measure, the FSB said. In some countries, finance companies can have high leverage and use short-term borrowings to fund long-term loans. This makes them vulnerable in periods of market stress should lenders refuse to roll over their loans.

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