Shadow Bank monitoring Plans for the Americas in the US

[congregatio]

On August 22, 2014, the Regional Consultative Group for the Americas (“RCGA”) of the Financial Stability Board (“FSB”) published a report on shadow banking. The purpose of the report was to design a shadow banking monitoring exercise for jurisdictions in the RCGA to ensure comparability, provide a “macro-mapping” monitoring component, combined with jurisdiction-specific analysis of the nature of shadow banking, its connections to the rest of the financial sector, and especially to the traditional banking sector, and potential risks from these connections (including case studies), and to propose recommendations and identify future challenges to improve the oversight of the shadow banking sector in the region. Among the key findings for the macro-mapping exercise, the report notes that the exercise: (i) resulted in the collection of valuable data on non-bank credit intermediation in the Americas;(ii) provides useful vehicle for disseminating the FSB’s methodology to non-FSB members; (iii) is a first step towards identifying the role of international financial centers (“IFCs”) in global non-bank credit intermediation; and (iv) identified four types of shadow banking entities in the region that may merit further attention because of the potential risk their activities pose to financial stability in specific jurisdictions. Such entities are open-ended investment funds that hold illiquid assets, large and highly leveraged broker dealers, non-bank deposit-taking institutions, and finance companies. The report recommends conducting the shadow banking monitoring exercise on an annual basis in the RCGA, focusing in particular on the four entities identified above, as well as broader monitoring efforts by jurisdictions engaged in significant IFC activities.

see: www.financialstabilityboard.org/publications/r_140822b.pdf