ECB’s Knot calls for stricter regulation of shadow banking
04 Dec 2018

The rise of non-bank financing is creating a major risk for financial stability in the euro zone and needs to be better regulated, European Central Bank board member Klaas Knot said on Monday.

“Non-bank financial intermediaries provide a high and increasing share of financing in the high-yield debt market,” Knot, president of the Dutch central bank, said in a speech in Amsterdam.

“Should conditions deteriorate, such financial intermediaries are directly exposed to considerable potential losses. And perhaps even more important, there could be system-wide spillovers beyond the high-yield debt markets.”

– By Bart Meijer, Reuters, 3 December 2018.

Link to Reuters.

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