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stefan ayache

Hedge Funds Are Shadow Banks in Need of Regulation, Bafin Says - Bloomberg - 1 views

  • Hedge funds act as shadow banks and should be added to the list of organizations in need of regulation
  • Germany’s financial regulator Bafin.
  • Shadow-banking definitions by the Financial Stability Board
  • ...26 more annotations...
  • are too narrow
  • Bafin is working on its own proposals to regulate the sector
  • make dodging rules more tedious and expensive
  • So-called shadow banking that takes place outside the scope of regulators is being targeted by financial watchdogs on concern that it may be used to evade a global clampdown on excessive risk-taking
  • The FSB
  • established a list of shadow-banking activities that may warrant tougher oversight
  • will seek agreement on the rules by the end of 2012
  • Authorities should know why money is deposited offshore
  • need for additional rules for derivatives
  • credit-default swaps
  • who should be allowed to sell CDS
  • purchase of the instruments should be restricted
  • the CDS market still isn’t transparent
  • tripling how much core capital lenders must hold to at least 7 percent of assets
  • how much freedom national regulators should have to go beyond minimum EU capital rules
  • Finance ministers are set to discuss the rules again at a meeting in Brussels
  • German banks that lend to local economies dominated by medium-sized companies are seeking to loosen standards for risk weighting of these loans
  • The current crises were caused by subprime and government bonds
  • force banks to hold Tier 1 capital equivalent to 3 percent of their total assets
  • would prevent lenders from accumulating assets worth more than 33 times their reserves
  • The measure is needed to stop banks from evading other capital rules
  • considering how to expand the range of assets that qualify as highly liquid
  • concerns that the current list is too narrowly focused on government debt
  • survive a 30-day credit squeeze
  • set to take effect in 2015
  • We, for example, have a huge government bond market; others don’t
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