33rd SUERF Colloquium & Bank of Finland Conference 2017 | Société Universitaire Européenne de Recherches | 14 September 2017 | Helsinki, Finland, Snellmaninkatu 9-11, 00170 Helsinki, Finland

Shadow banking is a broad concept. A possible definition is that it comprises non-bank institutions which do bank-like activities. Another characteristic, to which the word “shadow” refers to, is that the sector is less regulated. Shadow banks can increase competition and spur new innovation in the financial sector. The benefits could come in the form of i) improving efficiency and quality of financial services, and ii) offering better returns and risk diversification opportunities, especially for institutional investors and wealthy individuals. Markets may also become more liquid. On the downside, opacity and risks may increase.

The lack of regulation implies that it is difficult to monitor and prevent the build-up of leverage and concentrated risks in the shadow banking sector. Hence, the sector can be a source of systemic risks. Further, traditional banks may utilize the shadow banking sector for regulatory arbitrage. Hence, a big question is whether regulation should be extended to the shadow banking sector, to make it come “out of the shadows”? Will new regulatory loopholes between banks and non-banks develop? Will risks simply pile up in the shadow banking sector now that banks are more heavily regulated? Or will market discipline suffice to do the job of regulation in this sector? Is the growth of shadow banking this time more about FinTech; the provision of financial services making use of technological innovations? What are the fundamental problems of financial frictions they might have solved differently? Are new digital technologies key to finding solutions to the traditional financing frictions? Or are we experiencing just another boom in novel-looking financial services which ultimately share the same problems and risks as more traditional banks?

2017 SPEAKERS

Chair: Ernest Gnan
Head of Division
Oesterreichische Nationalbank and SUERF

Phillip Straley
President, ECO World Alliance
Regional Head, APAC

Chair: Urs W. Birchler
SUERF President

Daniéle Nouy
Chair of the Supervisory Board of the Single Supervisory Mechanism

Chair: Seppo Honkapohja
Deputy Governor, Bank of Finland

Nicola Gennaioli
Professor, Bocconi University

Henrik Normann
CEO, Nordic Investment Bank

Aleksi Grym
Head of Digitalisation
Bank of Finland

Risto Murto
CEO, Varma Pension Fund

Saskia de Vries-van Ewijk
Head of Department
Financial Stability
De Nederlandsche Bank