The Bank of England can already see the next financial crisis on the horizon. It doesn't have the power to stop it alone.

Bank chiefs fear Britain is badly exposed to another Liz Truss-style meltdown on the financial markets, triggered by uncertainty within a key sector which has grown increasingly important — and risk-exposed — over recent years.

Fears are focused upon the "nonbank financial intermediation" industry — a lengthy term covering any type of major investor which isn't a bank, such as hedge funds, pension funds, insurers or private equity.

Standard-setters globally have been battling to bring this poorly-understood sector under control — but with four dangerous "nonbank" events in as many years having come close to imploding the U.K. economy, plenty of policymakers believe Britain needs a more urgent approach. 

The market turmoil that a major collapse within this sector could trigger is hardly an issue that respects borders, and warnings have already been issued by watchdogs in the EU, U.S. and further afield. But for Threadneedle Street, it’s a particularly pressing problem because British businesses now rely on financial markets and nonbanks for half their funding.

Any crunch or turmoil would therefore not only create problems in the City of London — it could have an immediate effect on thousands of people’s jobs.

The BoE doesn't want to wait for the next thing to go wrong. But it can’t go it alone, so it is pushing internationally for a global fix.

“The U.K. has been clearly pushing it because of the size of the NBFI [nonbank financial intermediation],” said an EU official, granted anonymity to speak freely...

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