Banco de España
El sistema bancario en la sombra y el arbitraje regulatorio: ¿El eterno retorno?. José Mª Roldán.

Shadow banking and banking regulation

Banks’ capital requirements have threefold for banks as a whole, but even tenfold for certain portfolios.

  • We have made banks safer. They are more solvent, more liquid, better managed from the standpoint of risk, endowed with better corporate governance and more tightly supervised. But we are shifting risk to a part of the financial system where that improvement has not occurred.
  • Banks account for only 40% of the global financial system, and since 2011 it has been the institutional group that has grown least. There will increasingly be more financial institutions which are near-banks (not regulated as banks) –shadow-banks- and thus subject to suffer bank runs.
  • Bigtechs are also entering this shadow financial world. At present, fintechs and bigtechs providing financial services are in a limbo regarding the rules that affect them. In general, none of the sector-specific regulations apply because they lie outside the sectoral regulatory perimeter.
  • It is necessary to address immediately the problem of shadow banking, i.e. include in the regulatory perimeter all the financial agents that generate systemic risks: Same rules and regulations for same activities and risks.

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