Here is the good news. The Financial Stability Board (FSB) believes the task of reforming the banking sector to prevent a repeat of the 2008 crisis is almost complete. In a letter to the finance ministers of the G20 nations in February 2015, FSB chairman Mark Carney wrote that “much of the capital framework is complete and large, internationally active banks are on course to meet the new Basel III capital ratios almost four years in advance of the deadline”.
Here is the not so good news: the FSB is trying to work out where the risk from the banking sector has migrated. The answer, in essence, is into the shadow banking sector – bond markets, and the investment funds that dominate them.
