Non-Standard Operations in the Shadow Banking System

  • Valerio Lemma
Part of the Palgrave Macmillan Studies in Banking and Financial Institutions book series (SBFI)


This chapter will consider the problems related to the issuing of ABCPs, ABSs, and CDOs. Before that, I clarify that the use of securities lending and borrowing or other agreements is connected with the process velocity (in circulating the money), then must be monitored by the monetary authorities.


Credit Default Swap Monetary Authority Sovereign Debt Sovereign State Credit Institution 
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    See Tucker (2012) Shadow Banking — Thoughts for a Possible Policy Agenda, cit., p. 6 ff., where it is highlighted that “these markets are vital to efficient capital markets.”Google Scholar
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    See Claessens, Pozsar, Ratnovski, and Singh (2012) Shadow Banking: Economics and Policy, cit., p. 30, where it is summarized the empirical evidence that “around 50 to 70 percent of repo operations in the United States are cleared using TPR, with recent volumes approaching $1.8 trillion, much below the $3 trillion in 2008. The TPR market is a major source of wholesale funding for banks and dealer banks. The U.S. market is serviced by two clearing banks, Bank of New York and JP Morgan, both determined to be systemic by the Financial Stability Board. Pledged collateral is held with custodians and cannot be repledged. The TPR arrangement has several advantages: outsourcing collateral management to the TPR clearer, saving back- office costs for counterparties, and creating economies of scale, as securities are simply moved from one account to another within the clearer’s books. It also allows market participants to exchange collateral baskets, outsource risk management (haircut calculation, margin calls, and substitution), pricing, and other ancillary tasks.”Google Scholar
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    See Piga (2001) “Do Governments use Financial Derivatives Appropriately? Evidence from Sovereign Borrowers in Developed Economies,” International Finance, p. 189 ff.Google Scholar
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    For an analysis of the European building blocks, see Capriglione (2013) L’Unione bancaria europea, cit., p. 111.Google Scholar
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    See Lemma and Haider (2012) “The Difficult Journey Towards European Political Union: Germany’s Strategic Role,” Law and Economics Yearly Review, p. 390 ff., where there is the following conclusion: “it remains the necessity to define new development trends of the European legal system, which currently is hard-fought between the methodological austerity of the public finance (as framed since the Maastricht Treaty) and the auspices of a subsidiarian solidarism of the EU institutions (promoted by Mediterranean instances).”Google Scholar
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    It is not rare to see this question in the press, see Frisone (2013) “Le insidie degli swap plain vanilla,” Il Sole 24 Ore, November 9, p. 24.Google Scholar
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    See, on this point, Lemma (2006) “L’applicazione del Fair Value alle banche: problematiche giuridiche e soluzioni,” Banca borsa e titoli di credito, I, p. 723 ff.Google Scholar
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    See Monti (2000) Manuale di finanza per l’impresa, (Torino) p. 146, for an analysis of the forms in which these operations were designed in the beginning of the third millennium.Google Scholar
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    For a pre-crisis perspective, see Barth, Caprio, and Levine (2001) “The Regulation and Supervision of Banks Around the World: A New Database,” World Bank Policy Research Working Paper, no. 2588.Google Scholar

Copyright information

© Valerio Lemma 2016

Authors and Affiliations

  • Valerio Lemma
    • 1
  1. 1.Marconi University of RomeItaly

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