On the Green Paper published now, the Commission wonders on how existing and proposed EU measures already address shadow banking activities. In this context, it questions on five key areas relating to banking which are asset management, securities lending and repurchase agreements, securitisation, and other shadow banking entities.

The European Commission participates with recommendations and a public consultation to the process of developing further recommendations on the oversight and regulation of shadow banking entities which have been undertaken by the Financial Stability Board (FSB) in response to invitations by the G20 in Seoul in 2010 and in Cannes in 2011. In 2010, the Commission also consulted on how improving European statutory audit market.

The Green Paper presented by the Commission intends to gather views on how existing and proposed EU measures already address shadow banking activities. According to the Financial Stability Board, the shadow banking system is the system of credit intermediation that involves entities and activities outside the regular banking system. In coordination with the FSB, the standard-setting bodies and the relevant EU supervisory and regulatory authorities, the aim of the Commission's current work is to examine existing measures carefully and to propose an appropriate approach to ensure comprehensive supervision of the shadow banking system, coupled with an adequate regulatory framework.

As an example of the rules on shadow banking system prevention, the off-balance sheet vehicles, such as Special Purpose Vehicles, are regulated indirectly through banking regulation. Hedge fund managers are regulated directly through the Alternative Investment Fund Managers Directive, which addresses a number of shadow banking issues. Some Member States also have additional national rules for the oversight of financial entities and activities that are not regulated at EU level.