The report on the Economic and Monetary Affairs Committee’s (ECON) motion for an EP resolution on shadow banking, adopted on 22 October, is now available. ECON proposes:

  • increasing data and analysis capacities to get a complete overview of the shadow banking landscape. This could include the creation of a repo data warehouse and a public utility to track the transfer of risks in the financial sector;
  • considering the extension of the fourth Capital Requirements Directive (CRD4) to non-banking entities;
  • consolidation of entities for prudential purposes;
  • minimum haircuts for the collateralised financing markets;
  • a cap on the number of times a financial product can be securitised and imposing stricter retention requirements;
  • requiring that money market funds either become variable Net Asset Value or hold capital; and
  • legislation to tackle the structural vulnerabilities of exchange-traded funds.

(Source: ECON Shadow Banking Report)