Financial regulators 'need to consider shadow banking'

There is a need to carefully consider how the financial regulatory system will respond to shadow banking, one member of the Bank of England’s Monetary Policy Committee has stated.

Speaking in London today (January 22nd), Paul Tucker noted that shadow banking - a collection of firms, markets, instruments or structures that can replicate the services of commercial banks - must be included in any new regulations that are drawn up following the financial crisis.

’We need to think through how to avoid the problems of the past few years replicating themselves beyond the perimeter of the regulated banking sector,’ commented Mr Tucker, who is also deputy governor for financial stability.

He explained that finance companies, structured investment vehicles and money market mutual funds are all examples of shadow banking.

Also speaking this week was the Bank’s governor Mervyn King, who said during a speech at the University of Exeter that the recent increase in inflation should not prevent it from returning to the Bank’s target figure. ADNFCR-2318-ID-19572882-ADNFCR