Last Monday (29th May), the European Systemic Risk Board (ESRB) published their second EU Shadow Banking Monitor, which presents an overview of developments in the European shadow banking system to identify risks to financial stability. The assessment presented in this year’s report shows that the growth in broad EU shadow banking assets slowed markedly in 2016. In addition, the report highlights several risks and vulnerabilities which need to be monitored in the EU shadow banking system including, amongst others, Procyclicality, leverage and liquidity risk created through the use of derivatives and securities financing transactions.
Introducing the publication of the report, Mario Draghi, the Chair of the ESRB, gave an overview of the risks highlighted by the EU Shadow Banking Monitor whilst speaking at a hearing before the European Parliament’s ECON Committee. Go here to read more.