DYNAMICS OF THE DEVELOPMENT OF GLOBAL SHADOW BANKING: SCALE AND INSTITUTIONAL FORMATS

Abstract

Financial globalism, which is based on systemic and comprehensive processes of liberalization of the cross-border movement of capital assets, has acquired accelerated development dynamics in recent decades and is concentrated in a number of trends. Being closely connected with the traditional banking sector through funding and lending channels, it literally in three decades has turned into an integral structural component of the global financial market, securing for itself a unique financial specialization in the field of structuring financial products, transformation of liquidity and terms of debt obligations. Operators of the shadow banking industry, possessing significantly greater competitive advantages compared to commercial banks due to much lower transaction costs of economic activity and the absence of prudential regulation by the state. The use of shadow banks for the specified purposes is possible due to the systemic risks of financial activity generated by them: pro-cyclical activity; unregulated leverage due to unlimited issuance of liquidity and large-scale off-balance sheet operations on multiple re-collateralization of debt obligations as a funding mechanism for the global financial system; as well as the excessive complexity of intermediary credit chains and the non-transparency of the process of transformation of debt obligations. In order to prevent systemic financial crises, eliminate the procyclicality of the functioning of the shadow banking sector, and prevent financial "contagion" through the channels of cross-border financial transactions, the world community must take decisive measures in the area of regulating the activity of shadow banks. They should be aimed at strengthening the regulation of the current securitization procedures of shadow banks, the activities of pension funds and the functioning of national money markets; reforming the working methods of rating agencies; ensuring coordination and synchronization of regulations and supervision at the global level, building a transparent system of insurance operations, etc.