In this report, we build on our assessment of the FSB’s overall report to the G-20 (see Client Report REFORM109) to focus on the shadow-banking action plan.  FSB data earlier this fall (see Client Report SHADOW10) measured this sector as the FSB defines it, showing considerable growth in most shadow activities in nations.  However, the FSB also said it is trying to narrow its focus to more risky “shadow” activities, and its G-20 report reflects this not by emphasizing the FSB’s determination to keep finance in banks, but rather its determination to create “resilient market financing.”  Many prior issues are not discussed in this report – for example, finance companies and non-traditional insurance (i.e., bond and mortgage) are not substantively addressed.  Instead, securitization is a key focus here, with the FSB shifting from its earlier focus of preventing securitization risk to instead developing sustainable secondary markets for high-quality, transparent ABS. 

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