Reuters: Merkel urges more far-reaching financial regulation

27 October 2012

German Chancellor Angela Merkel urged the world's top economies to push ahead with further financial regulation, saying that not enough had been achieved so far.

The global financial crisis has prompted an overhaul of regulation in almost every part of the financial system from over-the-counter derivatives to bank capital requirements. "We had planned to regulate every financial centre, every financial actor and every financial market product. Significant progress has been made but the rules have not yet been implemented everywhere and we are still missing further areas." The chancellor pointed to "shadow banks", or non-bank financial institutions that are less regulated than banks, as an area where progress needed to be made.

Regulators worry that as traditional banks get more heavily regulated, risky credit activities will shift to shadow banks.

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