Shadow banking, tightening of rules is watered down
Financial Stability Board softens proposals for greater transparency of non-banks
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Key points
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Towards softer rules for non-bank financial entities: the Financial Stability Board softened proposals for greater transparency on shadow banks' lending and increased cross-border data sharing on emerging risks from leverage in hedge funds, asset managers, insurance companies and other non-bank entities.
The report
.In a report delivered to the G-20, the Financial Stability Board stated that any minimum standards for disclosures on the financial situation of non-banks would be developed 'in cooperation with industry' and 'designed "to protect the confidentiality of sensitive information".
The recommendations, which come ahead of next week's meeting of G-20 finance ministers and central bankers, represent the culmination of nearly five years of work on an area that regulators, including FSB chairman and Bank of England governor Andrew Bailey, have described as critical to safeguarding the modern global financial system.
Sharing
.The FSB's final report also softened proposals for 'proactive' cross-border information sharing, whereby involvement will only occur 'when it is determined that this can help identify and assess relevant cross-border risks'.
The proposals on disclosure and cross-border cooperation are in a list of nine recommendations to mitigate future crises of non-banks, such as that of Archegos Capital Management, a $36 billion collapse.
