Professor Philip Lane:

Another big lesson that was learned globally concerned the risks associated with shadow banking, in which some people engaged by employing regulatory arbitrage. We have been very active in this and there has been a big global effort on the part of the financial stability board to bring shadow banking out of the shadows. So much is out of the shadows now that a clear description of non-bank financial intermediation can be made. It does need regulation, as we did in relation to the transfer of loans to investment funds. The President of the European Central Bank, Mario Draghi, was here a couple of months ago and he acknowledged that, while a lot had been done on the regulation of non-banks, more should be done. The Central Bank has taken a leading global role in collecting and publishing information about what is going on. We are committed to shining a spotlight on the sector. We are showing what is going on in special purpose vehicles and in investment funds, what the origin of the money is and where it is going. We have published a lot and it might be helpful for the committee to see some of that. Ms Rowland takes the lead for us at the European Securities and Markets Authority, ESMA.