Insurance Europe has submitted a response to a consultation by the Financial Stability Board (FSB) on a policy framework for addressing risks arising in the shadow banking sector.
Insurance Europe supports the FSB's intention to identify the potential risk posed by leverage and maturity transformation undertaken by financial institutions outside the banking system, in particular where there is a risk of bank-like runs or contagion.
Insurance Europe has urged the FSB to weigh carefully the cost of any proposed measures against their potential to reduce systemic risk, particularly for proposed minimum requirements for collateral valuation frameworks, as these could result in a shallower collateral pool being available to investors.
It also calls for extensive cooperation between international supervisors on the framework in order to limit the potential for regulatory arbitrage.
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