A Policy Framework for Strengthening Oversight and Regulation of Shadow Banking Entities
This document sets out a policy framework to address shadow banking risks posed by non-bank financial entities other than MMFs ("other shadow banking entities"). A high-level policy framework, based on economic functions, is presented in section 1. A more detailed definition of the economic functions and the proposed policy toolkits are presented in sections 2 and 3 respectively. A discussion of the information-sharing process with regard to the implementation of the proposed policy framework is presented in section 4. The policy framework has been developed by an FSB workstream (hereafter WS3) tasked with assessing the extent to which non-bank financial entities other than MMFs are involved in shadow banking and to develop policy recommendations as necessary. A set of policy tools are proposed to mitigate shadow banking risks inherent in each of the economic functions so that they can be applied across jurisdictions to all entities that conduct the same economic function, while taking account of the heterogeneity of economic functions performed by individual entities within the same sector. The approach is forward-looking in that it is able to capture new structures or innovations that conduct economic functions generating shadow banking risks.
The FSB welcomes comments on this document. Comments should be submitted by 14 January 2013 by email to [email protected] or post (Secretariat of the Financial Stability Board, c/o Bank for International Settlements, CH-4002, Basel, Switzerland).