In terms of assets, it accounts for 40% of the EU financial system. I guess we can all agree that it would be irresponsible not to monitor such a large part of our financial system. The ESRB’s Shadow Banking Monitor was created to do just that. In the recently published third issue of the monitor, the ESRB identified several key risks.
If we continue to make it higher and higher, we will, in fact, run into more worldly constraints – both financial and political ones. And, whether we like it or not, we are also changing the rules of the game in monetary union and might set incentives that lead to new problems in the future.