This marked a significant change from earlier statements from officials suggesting the target was only to slow the growth in leverage. The authorities are clearly taking the issue seriously and they are making progress. The policy response, to date, has had a number of related elements. One is to subject shadow banking, including asset management activities, to more stringent oversight.
The new rules include stricter leverage caps for investment products and restrictions on investment in certain types of non-standard credit assets. Another element of the response has been stronger guidance to banks regarding their exposures to non-bank financial institutions.