Monday 24 July 2017

ECB wants more scrutiny of non-banks

Vitor Constancio
Vitor Constancio
Donal O'Donovan

Donal O'Donovan

Regulators should ensure that risks are not simply shifted from banks to so-called shadow lenders, the vice-president of European Central Bank said yesterday.

Vitor Constancio called for margin and haircut requirements to be applied to non-bank financial investment firms as tools to prevent them building up too much risk.

Since the crash, regulators including the ECB have ramped up supervision of the bank sector and imposed stricter rules around the capital regulated lenders need to hold against potential losses. Investment funds escaped much of that scrutiny.

"We need to avoid that reforming regulation on banks increases the incentives for risky leverage build-up outside the banking sector," Mr Constancio said.

Irish Independent

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