Regulatory changes shift risk between banks and non-banks

05/3/2011 | Risk.net (subscription required)

Regulators are starting to force financial risk to shift through new capital and liquidity requirements. Some of it is expected to land in the shadow banking system, which could make it more difficult for supervisors to oversee and monitor. "I wouldn't like to say that squeezing risk out of banks would make the financial system easier to supervise -- from the global financial crisis, it seems evident that risks supposedly transferred have a nasty habit of finding their way back into the banking system," said Karen Kemp, an executive at the Hong Kong Monetary Authority.

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