As the systemic importance of non-bank financial intermediation (NBFI or ‘shadow banking’) continues to grow—these entities now representing “over 40% of [...] financial [...] assets” in the EU—the European Parliament has called for “a thorough review of regulatory gaps” in the EU that targets NBFIs, including for “family offices and supply chain finance companies”, by adopting the ‘Van Overtveldt’ report (with 491 votes in favour, 83 against, and 84 abstentions) on Tuesday, 20 January.
“Such entities may contribute to financial stability risks when insufficiently regulated”, stress MEPs.
With regard to the banking sector, the European Parliament considers it necessary to implement the ‘Basel III’ prudential rules, despite the “continued lack of clarity” regarding the application of these standards in other jurisdictions. In response to recent comments by ECB Vice-President Luis de Guindos (see EUROPE 13787/19), MEPs assert, “Financial stability itself can be seen as a competitive advantage”.
According to MEPs, the EU’s prudential regulatory framework must remain solid, but it can be simplified, “particularly for smaller entities”. They believe that “there is room for simplification and harmonisation in the design and application of macroprudential buffers”. Moreover, they point out that a simplification of the financial rules introduced after the 2008 financial crisis “should be considered” if it provides substantiated benefits for the real economy and does not pose any risk to financial stability.
See the European Parliament’s report: https://aeur.eu/f/kbf (Original version in French by Mathieu Bion)