The FSB has highlighted that current reinforcements to banking regulation could drive some activity out of the traditional banking sector and towards shadow banking. Therefore, the Commission believes it is urgent to look in detail at shadow banking and at whether it is necessary to extend existing financial regulation to cover it – where it does not already – and/or at whether new regulation is required.
As EU Internal Market and Services Commissioner Michel Barnier says: "The European Union has shown global leadership in implementing ambitious reforms in the area of financial regulation, in particular for banks. What we do not want is for financial activities and entities to circumvent existing and foreseen rules, allowing new sources of risk to accumulate in the financial sector. That is why we need to better understand what shadow banking actually is and does, and what regulation and supervision may be appropriate, and at what level. We must shed light on all parts of the financial sector."
There will be a major conference on shadow banking in Brussels on 27 April 2012. The consultation will close on 1 June and the Commission will publish a summary of the results.
Any proposed changes to regulation will be accompanied by detailed impact assessments and take full account not only of the results of the Green Paper consultation but also of the results of the expert group on structural banking reforms recently appointed by the Commission.
The Commission will also continue to play a full part in international work (see Section 2 of the Green Paper) including working to ensure that there is a level playing field internationally for EU businesses.