Shadow banking worth $17 not 60 trillion, say Finadium
17 April 2012 Concord
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Finadium have slammed popular reports that the shadow banking industry is worth $60 trillion, stating the figure is almost 75 per cent less.
The securities lending consultant concluded that products that fit the FSB’s definition of shadow banking total $17 trillion in assets outstanding, substantially less than the $60 trillion popularly reported.
The report, 'Getting Ahead of Shadow Banking Regulation for Securities Lending, Repo and Money Markets', investigates the FSB's documentation, public presentations and relationships with national regulators that are driving conversations.
A second conclusion of the report is that money market funds are not shadow banks. Although these funds provide a diversified credit portfolio to investors, argue Finadium, they do not fit the profile of other instruments that fall under the shadow banking label. While regulators may ultimately seek greater regulation for money market funds, this should not be lumped together with shadow banking proposals.
The securities lending consultant concluded that products that fit the FSB’s definition of shadow banking total $17 trillion in assets outstanding, substantially less than the $60 trillion popularly reported.
The report, 'Getting Ahead of Shadow Banking Regulation for Securities Lending, Repo and Money Markets', investigates the FSB's documentation, public presentations and relationships with national regulators that are driving conversations.
A second conclusion of the report is that money market funds are not shadow banks. Although these funds provide a diversified credit portfolio to investors, argue Finadium, they do not fit the profile of other instruments that fall under the shadow banking label. While regulators may ultimately seek greater regulation for money market funds, this should not be lumped together with shadow banking proposals.
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