Bloomberg News

G-20 Pledges to Increase Oversight of Shadow-Banking System

November 04, 2011

Nov. 4 (Bloomberg) -- Finance ministers and central bankers from Group of 20 countries called for increased supervision of the so-called shadow banking system, according to a draft final statement from the group’s meeting in Cannes, France.

The G-20 said they “agreed to strengthen the regulation and oversight of the shadow-banking system.” The leaders also called for “enhanced market transparency, both on cash and financial commodity markets.”

The Financial Stability Board urged regulators to find ways to rein in banks that seek to shift risks off their balance sheets and minimize the amount of capital they need to hold, in a report published on Oct. 28. The shadow banking system had liabilities of about $16 trillion in the first quarter of 2010 and has contributed to real estate asset-price bubbles, according to a Federal Reserve Bank of New York report last year.

The FSB, which brings together regulators and finance ministers from the Group of 20 nations, said that “bank- sponsored shadow banking entities” may create “an opportunity for regulatory arbitrage.”

--Editors: Christopher Scinta, Anthony Aarons

To contact the reporters on this story: Ben Moshinsky in London at bmoshinsky@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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