A bid by China to rein in its "shadow banking" activity is producing results, thanks to slowing economic growth and tighter regulation.
shadow banking
Breaking News
Global regulators are making it more expensive for hedge funds and insurance companies to raise money from loaning shares in a bid to curb hitherto unregulated risks in "shadow banking".
Citing a copy it obtained of Document 107, Reuters reported that the State Council of China has published guidelines that aim to fortify regulation against the risky practice of shadow banking.
Federal Governor Daniel Tarullo said regulators should put their attention not only on banks but on the shadow banking system as well. He said policy options for shadow banks needed to be reformulated to counter its risks.
New policies are being instituted to make 'shadow banking' safer for market players, according to the European Union.
China's central bank said it would include all loans issued by trust companies in its database in an effort to curb risky lending.
The European Commission pledged to tighten control of so-called shadow banking on Friday, answering central bank calls for stricter regulation of the sprawling 46 trillion euro ($61 trillion) sector which has been blamed for aggravating the financial crisis.
