On 19 March 2012, the European Commission (the Commission) published a Green Paper on shadow banking activities (see the full Green Paper here).
The Commission defines shadow banking as “non-bank credit activity”, which includes:
- insurance and reinsurance undertakings which issue or guarantee credit products;
- money market funds and other investment funds with deposit–like characteristics; and
- investment funds that provide credit or are leveraged, including hedge funds.
The Commission considers that, while such activities are often considered to be advantageous alternative sources of credit, there is also the risk that shadow banking is exposed to similar risks to the banks, but without being subject to the restraints imposed by banking regulation and supervision.
The Green Paper reviews the current EU regulatory measures that apply to shadow banking and analyses the outstanding issues, with the aim of proposing an appropriate regulatory framework and system of supervision.
A conference on shadow banking will take place in Brussels on 27 April 2012. Stakeholders are invited to respond to the Green Paper before 1 June 2012.
