The European Banking Authority (EBA) yesterday proposed placing limits on EU-regulated financial institutions' exposures to shadow banks.
Under the proposed guidelines, which are open for consultation until June 19, banks will be given a degree of latitude to set their own limits.
Although shadow banks pose both macro- and micro-prudential risks, the EBA noted they still perform an important role in the functioning of financial markets, while regulators are still working out how risky they are.
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