The CRR/CRDIV legal framework covers mainly the banking sector, yet financial activity and the financing of the euro area economy have increasingly shifted to non-banks. 1 Since 2009, shadow banking entities have increased their share in total assets of the financial sector from 33% to 37%, while credit institutions have seen their share of intermediation shrink from 55% to 49%.
In this context, a macroprudential framework focused solely on banks will be “blind in one eye” – it will have only a partial perspective on intermediation patterns and the forces driving the financial cycle. It will also be highly prone to regulatory leakages. In the remainder of my remarks I will expand on these two points in some more detail.