The European Union and the Regulation of the Shadow Finance

For the last past years following the financial crisis, the EU has displayed a huge legislative activity to regulate the banking sector but had left aside the shadow banking system, except for the AIMF5 regulating the alternative investment industry. Things recently changed with the publication of a Green Paper dedicated to this non regulated finance. This paper estimates its shape, its potential risks and provides insights regarding the way to handle it from a regulatory perspective. It will be used by the Commission as a starting point to act from the second semester of 2013.