European Central Bank

Financial Stability Board Global Shadow Banking Monitoring Report 2013

FSB-ShadowBanking-2013

The shadow banking system can broadly be described as credit intermediation involving entities and activities outside the regular banking system. Intermediating credit through non-bank channels can have important advantages and contributes to the financing of the real economy, but such channels can also become a source of systemic risk, especially when they are structured to perform bank-like functions (e.g. maturity transformation and leverage) and when their interconnectedness with the regular banking system is strong. Therefore, appropriate monitoring of shadow banking helps to mitigate the build-up of such systemic risks. The FSB set out its approach for monitoring the global shadow banking system in its report to the G20 in October 2011. This report presents the results of the third annual monitoring exercise following this approach, using end-2012 data. The report includes data from 25 jurisdictions and the euro area as a whole, bringing the coverage of the monitoring exercise to about 80% of global GDP and 90% of global financial system assets.

European Central Bank Paper: Shadow Banking in the Euro Area

Shadow banking, as one of the main sources of financial stability concerns, is the subject of much international debate. In broad terms, shadow banking refers to activities related to credit intermediation and liquidity and maturity transformation that take place outside the regulated banking system. This paper presents a first investigation of the size and the structure of shadow banking within the euro area, using the statistical data sources available to the ECB/Eurosystem.

IMF, EU, European Central Bank “Troika” Greece Debt Sustainability Analysis October 21, 2011

Since the fourth review, the situation in Greece has taken a turn for the worse, with the economy increasingly adjusting through recession and related wage-price channels, rather than through structural reform driven increases in productivity. The authorities have also struggled to meet their policy commitments against these headwinds. For the purpose of the debt sustainability assessment, a revised baseline has been specified, which takes into account the implications of these developments for future growth and for likely policy outcomes. It has been extended through 2030 to fully capture long term growth dynamics, and possible financing implications.

Oversampling the wealthy: eye for an eye, euro for a euro

When a particular part of the population is especially important for a survey, oversampling that group can help the survey to provide better estimates. However, oversampling is not always easy or inexpensive. The ideal situation is one where information exists for the population that can help to discriminate the interesting sub-group and that information is available for sampling. Sometimes the information is weak for the intended purpose and sometimes there are restrictions on the use of information that make sampling difficult or impossible.

Target2-Securities Shareholders Visibility in Cross Border Environment

On 11 March 2009 the T2S Team organised a conference for EU issuers, primarily of equity securities. The aim of the event was for the Eurosystem to clarify the scope of T2S and discuss the project’s impact on issuers and their agents. The most important topic identified in that conference was the need for issuers to be able to identify their shareholders in a cross border environment. It is evident that T2S per se does not create the problem. This is an existing issue where- and whenever cross border transaction activity is present. However, the creation of a single settlement engine for Europe may intensify the issue due to the expected increase in cross border activity associated with T2S and may thus increase the desirability of a harmonised approach.

ISO 20022 Standards and SWIFT

The T2S User Requirements Document (URD) states that “The T2S Interface shall use ISO 20022 as its single standard for all communications, both inbound and outbound”. Therefore messages have to be either ISO20022 registered, or at least compliant with the methodology of ISO200221. SWIFT plays an important role in the registration process of ISO 20022standards and in the development of messages for T2S. Therefore, at its meeting of 9-10 October, the AG agreed that clarification was needed on the relationship between ISO 20022standards and SWIFT2.

Glossary of Terms Related to Payment, Clearing, and Settlement Systems

Clearing fund – A fund composed of assets contributed by participants in a CCP, or by providers of guarantee arrangements, that may be used to meet the obligations of a defaulting CCP participant and/or in certain circumstances to settle transactions and cover losses and liquidity pressures resulting from such defaults. A Clearing Fund serves as insurance against unusual price movements not covered by the margin calculation in case of a member default. Each Clearing Member typically has to contribute to the Clearing Fund. It may consists of Clearing Members’ directly- deposited capital, or securities or third-party bank guarantees. It is used for securing the counterparty risk not covered by margin deposits.

Technical Group 3 Analysis of Target2-Securities Dedicated Cash Accounts

During its 28/29 November 2007 meeting, the Advisory Group agreed to add possible functionality in the URD on the prioritisation of multiple T2S dedicated cash accounts. The AG also asked TG3 to analyse the issue in more depth and the 3CB+ to calculate the additional costs of this approach. The AG agreed to review the matter in view of the feedback from the public consultation and the cost and the consequences for the market. Following the AG decision, the prioritisation of multiple T2S dedicated cash accounts functionality was immediately added into the URD by the project team.

Target2-Securities Economic Impact Analysis Status Report

On 18 December 2007, the ECB published the TARGET2-Securities (T2S) User Requirements Document for public consultation. In parallel, the ECB published a note setting out the proposed methodology for the economic impact analysis (EIA) of T2S. This note proposed two indicators to evaluate the potential benefits of T2S for market participants and the European economy. The first indicator is the average cost per settlement instruction. The aim of this indicator is to focus on a direct comparison between the cost per settlement instruction with T2S and the current market structures without T2S.

Target2-Securities User-Focused Programme Plan Cover Note

This consolidated programme plan encompasses all Eurosystem activities and is based on the ECB’s internal detailed planning and an extract of the 4CB’s internal planning. As part of the consolidation exercise, the project office of the ECB and of the 4CB tried to minimise the impact of the 7 additional months needed for the validation of the General Functional Specifications, without impacting the scope of T2S, the expected quality of the final delivery, the price or the go-live date. This was achieved through an increased parallelism of activities, in particular in the production of the UDFS and the conduct of the Eurosystem and User Acceptance testing phases.

Communication on Clearing and Settlement – The Eurosystem’s Response

The Eurosystem strongly supports the Commission’s objective of creating a safe, efficient and integrated EU clearing and settlement infrastructure. In principle, the Communication identifies the key issues that need to be addressed in the field of clearing and settlement in order to enhance integration and reduce systemic risk. The present infrastructure for securities clearing and settlement transactions in the EU remains insufficiently harmonised, highly fragmented and inefficient for cross-border activities. Although some consolidation has been achieved, there remain a very large number of service providers with limited competition between each other.