FRANKFURT (MNI) – The interaction between shadow banks and
traditional banks could be regulated so as to minimize systemic risks
emanating form the shadow banking system, European Central Bank
Governing Council member Jens Weidmann said Wednesday.
“Since the risks to financial stability stem not least from the
connection between the shadow banking system and the traditional banking
system, an indirect regulatory approach could be to develop rules for
the interaction between banks and institutes of the shadow banking
system,” Weidmann said.
In a speech text prepared for delivery at the financial market
regulation conference in Berlin, Weidmann said that “direct regulation”
of shadow banking institutes or some of their activities could be an
alternative.
The head of the Bundesbank also said that said “the shadow banking
system must be supervised sufficiently to be able to detect developing
systemic risks.”
Such supervision should take place at both the macro and the micro
level, Weidmann argued.
“At both levels, insufficient availability of incrementally
comparable data are posing at the moment a challenge, that must urgently
be overcome,” he said. Work on this is in progress Weidmann said,
pointing to a new set of statistics the ECB presented earlier this week.
On Monday, the ECB released a new set of indicators that collect
data on financial vehicles created outside the banking sector for this
purpose.
–Frankfurt bureau; +49-69-720142; jtreeck@marketnews.com
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