Local view for "http://purl.org/linkedpolitics/eu/plenary/2012-11-19-Speech-1-141-000"
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"en.20121119.22.1-141-000"2
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Mr President, ladies and gentlemen, this debate on shadow banking comes at a well-chosen moment. Only yesterday, the Financial Stability Board formulated its conclusions and recommendations on the shadow banking approach. In many respects, these are actually similar to those on which you will be voting tomorrow.
We await the proposals from the Commission, which will be presenting a communication. We look forward to receiving them and then a number of very concrete steps will be taken, which we as a Parliament will, of course, scrutinise closely.
In fact, the shadow banking phenomenon covers a whole range of very different forms of credit arrangement outside the conventional banking sector, and it is therefore not subject to the same rules. As the name suggests, it involves complex, often opaque financial activities not sufficiently overseen by anyone, or any institution or supervisory authority. That does not mean that forms of shadow banking could not contribute to the financing of the real economy and consequently not be described as positive.
Firstly, though, the conventional banking sector and shadow banking are clearly linked in various ways. Secondly, we know that systemic risks can potentially arise, which, furthermore, have also played a part in the development of the financial crisis, and that there is also a shift towards forms of shadow banking in order to avoid oversight and regulation of the conventional banking sector. Thirdly, it is a very large and growing phenomenon, which is estimated to encompass 25 % to 30 % of the financial sector.
For all those reasons, appropriate instruments need to be created to give the authorities an overview of the phenomenon, in order to be able to evaluate the risks and take action if necessary. Ideally, we will manage to encourage instruments that stimulate the real economy and can contribute to economic growth without causing excessive risks and to keep tight control over more speculative or risky forms.
That is therefore the subject of my report, and I thank all my colleagues and especially the shadow rapporteurs for their valuable cooperation, leading to a number of conclusions which are widely supported. I shall not mention them all in detail, but the most urgent seems to me to be the need for monitoring, the mapping of financial flows.
Supervisory authorities should have at least a general picture of the scale of repo transactions and all forms of encumbrance or clawback arrangements entered into by institutions. Hence the idea of recording information in a trade repository. There should also be a sort of central EU database of repo transactions. Common rules must be devised for reporting on transactions relating to principal, interest rate, collateral, haircuts, tenor, counterparties and the like. There is also a need for a complete overview of risk transfers by financial institutions in the form of a central register.
In fact, what it comes down is that we need to be able to find an answer to simple questions such as ‘who has to do what to whom and when and at what price?’ Also, the conventional banking sector has to be protected by setting a limit on exposure to shadow banks, and shadow banking initiated by banks must be included in the balance sheet and consolidated. As regards securitisation, stricter rules have to be applied in order to encourage quality products, and consideration needs to be given to imposing a limit on the number of times a financial product can be securitised.
Finally, a number of recommendations are being put forward for certain specific funds such as money market funds and exchange traded funds to ensure greater transparency and limit potential risks to the system.
Ladies and gentlemen, the ball is now in the court of the G20 and the Commission. It is obvious that we can devise a good response only with an overall global approach. It now depends on the institutions and regions concerned reorganising in the next few months so that a light can finally be shone on the part of the financial world that has, until now, been too obscure. That is an absolute must if we want to avoid another financial crisis in the future."@en1
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