Shadow banking system

A shadow banking is a financial firm operating bank-like transactions without how banks have access to the Central Bank and without government guarantees as it may be for example a deposit protection. It is not subject to state regulations as banks.

For shadow banking system different situations may include:

  • Companies such as hedge funds or private equity funds that operate financial transactions within the legal framework, but are not credit institutions.
  • Subsidiaries of banks that are operating outside of bank balance sheets. This includes conduits, structured investment vehicles, and some forms of special purpose entities.
  • Company, ie illegally operate without proper authorization, money and banking. This is often accompanied by fraudulent practices and money laundering.

In connection with the financial crisis from 2007 shadow banking is used in the first two meanings as a slogan, it is normally parked on too small a regulation of the financial markets. To what extent have shadow banks played an important role in this financial crisis, is controversial.

In the United States since the early 1990s, the shadow banks had proliferated. Since the mid- 1990s, their total assets surpassed the American Geschäftsbanken.Im 1998 became the American hedge fund Long-Term Capital Management ( LTCM ) as a result of losses in the billions in a threatening crisis. Because LTCM had borrowed large sums of money at banks, the repayment of which was questionable, organized the New York National Federal Reserve Bank a bailout.

The Financial Stability Board, the EU developed in 2011 on behalf of the G-20 a full investigation. Under the shadow banking system is essentially an existing alongside the traditional banking system understood, operates the intermediation of credit. The study comes to the conclusion that the shadow banking system had 2002 to 2007 its sales of approximately $ 27 trillion to $ 60 trillion more than doubled in the years examined. It noted systemic risk and a tendency to shift risks in economies with lower requirements ( regulatory arbitrage ). From this it deduced recommendations for the regulation of the system and will report annually from 2012 through the development. By 2011, a further increase to 67 trillion has been registered, which represents one quarter of the total turnover in the global capital market.

At European level, the Financial Stability Board is trying to implement these recommendations with direct and indirect actions. The European Commission, as a member of the FSB, to examine options and steps to regulate shadow banking. In March 2012, she published a vorlegislatives Green Paper, which should poll by a wide consultation of stakeholders expectations and viewpoints. In November 2012, the European Parliament followed with a resolution requesting the Commission to act.

In August 2013, the FSB put ahead of the G20 summit in Moscow a draft, which is to regulate and 2015, the shadow banking system in all major economic regions. Giegold criticized the fact that the European Union had not taken up the proposals before. In particular, money market funds would continue to agree fixed redemption values ​​, making them financial instruments and risks bundles.

End of January 2014, the European Commission put forward a proposal regarding shadow banks in connection with the regulation of financial risks. It proposes a registration requirement for securities lending transactions in order to create transparency at this interface between the banking system and the shadow banks. This would facilitate the risk assessment of the papers and allow customers access to essential information on the business of investment funds involved.