This is the third seminar in the Salzburg Global Seminar series that takes a forward look at changing regulatory environment and business models, explores interactions between technological innovation and regulation an d re-appraises ethical issues raised by finance, bringing together different disciplines and critical perspectives.

The seminar will start with a progress review and an update on implementation and implications of regulatory reforms, in particular with regard to systemically important financial institutions and their cross-border operations. It will then focus on this year's special topic - the risks posed to financial markets by the non-bank financial sector, or 'shadow banking'. The Financial Stability Forum (FSF) has published two consultation papers on shadow banking, identifying five work streams for which recommendations will be made by the end of 2012, including money market funds, securitization, and repos and securities lending. The EU's 2012 Green Paper on Shadow Banking addresses similar issues, as does the USA's Dodd-Frank Wall Street Reform and Consumer Protection Act 2010.

Participants will examine recommendations on shadow banking from the FSB and the EU Commission and compare t hem to the Dodd-Frank provisions and to alternative approaches suggested by the Institute of International Finance. Dodd-Frank subjects any 'systemically significant non-bank financial institution' defined under the Act - such as insurance companies, money market funds, hedge funds and central clearing parties - to regulation by the Federal Reserve Board (similar to the regulatory structure for banks). The Institute of International Finance recommends a risk assessment-based approach to identify the proper response, which does not necessarily mean regulating such entities as if they were banks.

Participants will explore the following options:

• Should banks be able to conduct operations in the shadows?
• Should non-bank institutions be able to operate as if they were banks?
• How systemically relevant are shadow banking institutions?
• How much non-bank credit intermediation do we want or need?
• What are the main trade-offs that need to be addressed in the regulation of non-bank institutions?

Ideas and suggestions generated at the seminar will be captured in a comprehensive report and shared with a wide range of stakeholders.