First, we must be certain that a stringent regulation of the banking system does not lead to a shifting of bad risks into the non-banking sectors, without ensuring that they cannot cause systemic damage there. Apart from the fact that the term “shadow banking” is a particularly unfortunate one, I regard transparency as being very important here.
At the same time, only those areas should be regulated which can in fact trigger systemic risk. Innovations in the financial sector should not be blocked per se. Second, many financial instruments are not uniformly European and are sometimes insufficiently comparable because of a lack of standards and a lack of transparency. I have already mentioned the problem of ABS.