Michel Barnier, European Union Commissioner for Internal Markets, held a press conference on Monday to discuss Shadow Banking and related matters. This is part of the EU’s contribution to the Financial Stability Board’s yearlong focus on Shadow Banking. We listened in, and below are our highlights from Mr. Barnier’s comments specifically as pertains to Shadow Banking activities.
– Can’t afford the luxury of a short memory on financial crises
– Need more detailed analysis before taking action
– Thinks that Shadow Banking represents 25% to 30% of the world’s financial sector
– European percent is increasing
– Shadow Banking can provide useful diversification – EU not waging war – but should be within the framework of transparency
– Want to define what is Shadow Banking
– CRD II, CRD IV, AIFM, other regs already address many issues brought up by Shadow Banking
– Europe wants to be in the lead on Shadow Banking issues
– Finance should be in the service of the real economy
Audience question: why is the EU taking a mild tone towards banks in their green paper?
Barnier: Don’t want to accuse any of the players in Shadow Banking and who often have a helpful role to play. Consultations are not concluded. No war of ideology. Players do need to expect public regulation.
Here is a green paper that the EU released today on Shadow Banking.
Related to today’s press conference, the EU will hold a Shadow Banking conference on April 27, 2012.
Finadium will publish a more detailed research report on Shadow Banking for securities lending, repo and money market funds in mid-April.