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BoE official calls for shadow banking control

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BoE official calls for shadow banking control
Paul Tucker - Deputy Governor, Financial Stability; Bank of England

Regulators should have greater levels of control over the growing global shadow banking industry.

That is the opinion of Bank of England deputy governor Paul Tucker, who believes powers should be granted to supervisors that would enable them to help curb this expansion through demanding more collateral on transactions.

During a speech delivered at the European High Level Conference in Brussels today (27 April), Mr Tucker noted that the trend of shadow banking needs to be brought under control sooner rather than later.

"The authorities should be able to step in and set minimum haircut or margin levels for the collateralised financing markets, or segments of them," he stated.

Mr Tucker - who assumed his current role in March 2009 - went on to say that such a process would require international co-operation between regulatory bodies.

Under the official's proposals, non-banking financial companies would also face "bank-type regulation and supervision" with regard to their balance sheets.

By Gary Cooper

Comments (1)

GB Gary Wright says:
Apr 30, 2012 16:55 GMT
As usual Paul Tucker is talking plenty of common sense. However the capability for the industry to manage collateral and margin today is woefull. This will get far worse when OTC enter central clearing that will have serious consequences on market liquidity
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