LONDON, Aug 29 (Reuters) - The European Union may apply its mandatory capital rules for banks to a wider set of institutions to cover risks in “dark corners” of the financial system, an EU draft document said.
The document has been written by the bloc’s European Commission and is due to be published next Wednesday.
It outlines possible reforms to regulate “shadow banking”. This refers to lightly supervised intermediaries outside mainstream banks that generate trillions of euros to finance the economy through securities lending, repurchase markets and securitisation.
Extending the scope of capital rules to shadow banks would respond to EU lawmaker concerns that similar activities should be regulated in the same way, the document obtained by Reuters said.
“It is not possible to discuss shadow banking without considering the scope of application of the EU banking prudential rules,” the document said.