Why Canada must stress test its shadow banks
and asset managers, as the current voluntary approach to assessing market liquidity risks from these institutions may have limits.”Thankfully, the transmission of risks from shadow banks is already on the radar of Canada’s banking regulator, the Office of the Superintendent of Financial Institutions., stressing that it is examining how federally regulated financial institutions are exposed, both directly and indirectly, to non-bank financial players.
“Unrestrained money issuance, along with alternative credit strategies and structures within the NBFI sector, were key contributors to the global financial crisis in 2008-2009,” it later added. Although information sharing between regulators might seem obvious, privacy legislation often hampers that process, the IMF said. But so do regulatory turf wars.
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