Shadow banking from a Swedish perspective
Date
26/11/2014
Daniel Hansson, Louise Oscarius and Jonas Söderberg analyse the role played by shadow banking in the Swedish financial system.
Shadow banks played a major role in the global financial crisis and are not subject to the same regulation and supervision as normal banks.
The authors show that shadow banking in Sweden is relatively small, compared with the traditional banking sector in Sweden and compared with shadow banking in many other countries. Moreover, the Swedish shadow banking sector is largely comprised of investment funds that are regulated and under the supervision of Finansinspektionen (the Swedish financial supervisory authority). Shadow banks in Sweden contribute to the funding of the Swedish banks, primarily through investments in the banks' fixed-income securities. However, money market funds in the United States contribute more than twice as much to the Swedish banks' funding, compared to the Swedish shadow banks. This means that shadow banking abroad has greater significance for the Swedish financial system than shadow banking in Sweden. In conclusion, the authors point out the need to follow the development of Swedish and foreign shadow banking, as it can influence financial stability in Sweden.
The article is included in this year's third issue of the Sveriges Riksbank Economic Review.
By Daniel Hansson, Louise Oscarius and Jonas Söderberg
The authors work at the Monetary Policy Department and the Financial Stability Department.
