Industrial enterprises are not shadow banks

The European Banking Authority (EBA) has issued a consultation paper aimed at regulating shadow banks. It has a very broad definition of shadow banks, one which would also cover those financing companies of industrial enterprises that are not subject to the EBA.

Without an explicit exemption, such finance companies would be classified as shadow banks. In addition, the EBA wants all financial vehicle corporations to be indiscriminately considered as shadow banks. This could thwart current initiatives to create a European market for simple, transparent and standardised securitisations. The BDI has issued a critical position paper on this matter.