The shadow banking sector is an ill-defined financial segment that expands and contracts credit outside the regulatory perimeter. It was critical in the buildup and demise of the credit boom, and has received much regulatory attention ever since.
Certain non-bank financial intermediaries are considered to be shadow banks for the purpose of prudential regulation. While a narrow definition would be based on the degree to which intermediaries replicate a mismatched funding and lending structure, a broader definition embraces all large intermediaries that because of their scale, role, funding or investment strategy may contribute to systemic risk.
This advanced course focuses on financial and prudential aspects, with some attention to its legal underpinnings. It is taught by experts with significant policy experience or legal insight on this high specialized theme.
This course reviews the main elements of their regulation and some emerging issues related to their relevance for macroprudential policy.
You will learn the implications of European (as well as some US) legislation on insurance companies, money mutual funds and central clearing platforms for derivatives, as well as for typical shadow banking funding and lending strategies such as secured credit and security lending. The latter contractual arrangement enables intermediaries to promise liquidity on demand to investors, thanks to the legal construction built on the so called safe harbor status.