Fidelity Investments urged European regulators to abandon the term “shadow banking” and said that its money market mutual funds should not be considered part of the so-called shadow banking system.
In a comment letter to the European Commission dated Friday, the Boston investment giant said that some of the entities being labeled as shadow banks are “neither in the shadows, nor banks, nor even bank-like.” The firm went on to say that money markets are “significantly more transparent than banks, and, therefore, hardly in the ‘shadows.’”
Fidelity has been speaking out on money market regulation in the United States and overseas, as regulators look to bolster oversight of large pools of money to prevent another global financial crisis. Fidelity is the one of the world’s largest managers of money market funds, and the biggest in the United States, with $415 billion in assets.
The European Commission’s Green Paper, on which Fidelity was commenting, suggests that money markets, mutual funds that use leverage, and insurance companies that guarantee credit products all are being analyzed as possibly part of the shadow banking system. Fidelity called the term “confusing and misleading.”