Alternative Investment Management Association Representing the global hedge fund industry
The G20 instructed the Financial Stability Board (FSB) to develop recommendations to strengthen the oversight and regulation of the shadow banking system. After a consultation conducted in November 2012, the FSB published its policy recommendations in August 2013.
The FSB recommendations are contained within three reports and focus on five specific areas in which policies are needed to mitigate the potential systemic risks associated with shadow banking:
(i) to mitigate the spill-over effect between the regular banking system and the shadow banking system;
(ii) to reduce the susceptibility of money market funds (MMFs) to "runs";
(iii) to assess and align the incentives associated with securitisation;
(iv) to dampen risks and pro-cyclical incentives associated with securities financing transactions such as repos and securities lending that may exacerbate funding strains in times of market stress; and
(v) to assess and mitigate systemic risks posed by other shadow banking entities and activities.
These are now subject to respective national implementation.
FSB overview of policy recommendations (August 2013)
Shadow Banking: scoping the issues (April 2011)
Summary - Developments in the shadow banking debate (October 2013)