ECB: Regulation could be extended to shadow banks

HELSINKI: Major organisations that carry out banking activities, but are not banks, may become so important to the financial system that they need to be regulated like traditional banks, a European Central Bank governing council member said.

Financial regulators are seeking to shine a light on so-called “shadow banking”, a 24-trillion-euro industry in Europe – half the world’s total – that comprises money market funds, some hedge funds, and firms involved in securities lending and repurchase markets.