8/10/2019 Gap-fill (Section a)_Shadow Banking

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EU Considers New Controls for Shadow Banking Sector

The European Commission is widening its (1) __________ powers to include shadow

banking, heralding new controls over the sprawling and largely unchartered 46 trillion euro

sector blamed for helping trigger the financial crisis. The EUs (2) __________launched a

consultation with industry on Monday, with a view to writing rules to control shadow

banking, a term describing activity resembling the basic borrow-and-lend model of banks.

We do not want financial activities and entities to (3) __________existing and foreseen

rules, allowing new sources of risk to accumulate in the financial sector, said a spokesman.

Hedge funds and private (4) __________are often cited as examples of shadow banking.

But the term can also take in investment funds and even cash-rich firms that lend

government bonds to banks, and which in turn use them as (5) __________when taking

credit from the European Central Bank. Shadow banking can also refer to offshore vehicles,

such as those banks used before the crisis for (6) __________, using credit or borrowed

capital to increase the earning potential of stock. The sector, which operates on the

(7) __________of mainstream banking, has more than doubled over the past decade.

Any European regulation will be cast within the Financial Stability Boards (FSB)

(8) __________, although there is always scope for Brussels to sharpen certain rules.

Difficulty in agreeing an exact definition of the problem, however, may (9) __________attempts to regulate it. The Commission, which writes the first (10) __________ of EU laws

before seeking the green light from the blocs 27 member states and the European

Parliament, said it was focusing on asset management, securities lending and repurchase

agreements, securitization, and other shadow banking entities.

(1)A rigidity B regulatory Cauthoritarian Dremit

(2) Aexecutioner Bexhibitor Cexecutive Dexecutor

(3) Acircumnavigate Bcircumspect Ccircumscribe Dcircumvent

(4) Aequality B equity Cequanimity Dequerry

(5) Asafety Bsecurity Cprotection Dthreshold

(6) Aexertion Badvantage C application Dleverage

(7) Afringes Boutskirts Csuburbs Denvirons

(8) Apurpose Brationale Cframework Dagenda

(9) Aunderline B underpin C undermine D underscore

(10) Adraft Bdrawing Cstatute D sketch

Q. Do you think it is right to regulate the shadow banking industry?