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Shadow Banking: Current Headaches, Old Problems?

David Ramos Muñoz | 30 de noviembre de 2024
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Shadow Banking: Current Headaches, Old Problems?

Abstract

Shadow banking was a buzzword in regulatory and policymaking circles right after the Great Financial Crisis (GFC) (2008-20091). Then it mutated into the more neutral “Non-Bank Financial Intermediation” (NBFI). Then it ran out of steam, ceding the spotlight to more urgent matters. Now it is back. The forensic examination of different episodes of market turmoil, e.g., March 2020 (COVID), the failure of Archegos Capital Management in March 2021, the 2022 turmoil in some commodities markets, and the stress in UK government bonds in September 2022, all involved NBFI entities, prompting the Financial Stability Board (FSB) to look closely into it.

The results are out. In a letter of 22 July 2024, the FSB Chair urged the G-20 members to act on NBFI,2 a call for action supported by a separate report,3 one of just two that the FSB Chair presented to the G-20 meeting in 25-26 July. The IMF too, in its latest Global Financial Stability report (April 2024) highlights the risks arising from private credit funding by non-banks.4 In the European Union (EU) the Commission issued its macroprudential review, where it highlighted NBFI’s risks,5 and a consultation on the adequacy of macroprudential policies for NBFI risks.6

Why has shadow banking resurfaced? And should we be concerned? The tentative answers are: “system neglect” and “short-term, yes; long-term… maybe not, since the problem is unsolvable”.

This paper revisits shadow banking.7 After GFC reforms shadow banking has changed into NBFI. It is respectable, evolved… and again a source of worries. The FSB stock take mentions old acquaintances, like money-market
funds, (MMFs8) which were prominent during the GFC, and some new actors, e.g., open-ended funds, their liquidity mismatches,9 or margining practices10 but the tune sounds familiar… because the underlying problem is the same.

NBFI, or shadow banking, is the flip side of banking. If banking is tightly regulated, pressure mounts for financing to migrate towards less regulated parts. However, this logic of “arbitrage” only tells one part of the story. The other part of the story is that policymakers, like all humans, tend to focus on one salient risk at a time, while neglecting overall consistency (“system neglect”11). Monitoring NBFI requires painstaking effort of comparing, analyzing and regulating…

Shadow Banking. What is it about?

2.1. Shadow Banking: stabilizing a concept

“Shadow banking” rose to prominence after 2009 because it was an opportune concept. The forensic analysis of the Great Financial Crisis of 2007/2008 revealed the fundamental role played by non-bank financial intermediation (NBFI) on one side, and the fragilities of the repo market, which had until then come unnoticed.12 Thus, shadow banking was useful to both denote the idea that a lot of financial market activity took place in unconventional forms, and to connote that such “unconventional” forms could be opaque (or shady), and in need of urgent attention. The Financial Stability Board (FSB) defined “shadow banking” in 2011 as:

“a system of credit intermediation that involves entities and activities outside the regular banking system, and raises i) systemic risk concerns, in particular by maturity/liquidity transformation, leverage and flawed credit risk transfer, and/or ii) regulatory arbitrage concerns”13.

The definition itself was vague because it tried two things at once: to define shadow banking as a workable policy concept, and to give examples to encompass the risks that were more salient during the crisis.

To understand what is a “shadow bank”, and the difficulties of classification, one just needs to ask, “what is a bank, and why is it a source of risk”. A bank’s defining feature is “maturity transformation”, i.e., a bank is funded by short- term, liquid, money-like liabilities (deposits) and invests in longer-term assets. Thus, no bank can pay back its clients’ deposits and short-term creditors if all these try to redeem their claims at the same time. This would trigger a bank run, which can precipitate a system-wide crisis. More broadly, a bank engages in credit intermediation, i.e., it resorts to debt financing to provide credit (loans), which means that it is very sensitive to underlying funding conditions. More broadly still, a bank is heavily leveraged;

its liabilities representing around 95% of its funding side (equity around 5%), and thus small variations in funding and return conditions can wipe out its equity. Thus, one can define a “shadow bank” very narrowly, as an entity engaging in “maturity transformation” (short-term liabilities; longer-term assets), more broadly, as an entity engaging in credit intermediation, and more broadly still, as a heavily leveraged entity, and that is not regulated as (tightly as) a bank. The FSB definition tries to capture all entities engaging in maturity transformation, and those entities engaging in credit intermediation or excessive leverage, which present concerns of systemic risk or regulatory arbitrage.

This idea can encompass entities like Money Market Funds (MMFs), which are funded by securities that (depending on the MMF conditions) can be redeemable on sight, at a stable Net Asset Value (NAV) (i.e., I can redeem the EUR 2,000 I have invested, the sum I redeem does not depend on the liquidation value of the fund’s assets) like bank deposits and may invest some money in corporate debt. By the same token, it can include other types of funds, as long as they intermediate credit, and are open-ended, or funded by short-term debt.

The concept can also encompass broker dealers, which may fund their clients’ credit positions, and are partly funded by short-term debt (e.g., repos), or securitization vehicles, which may invest in mortgage loans, or bonds, and are funded by short-term debt, etc. The features of these entities, and their activities, may vary a lot, depending on the characteristics of the market and the contract documentation. The important thing is that the concept is elastic enough to capture different types of activities.

Thus defined, the FSB laid out its shadow banking agenda, which comprised classification and measurement, and regulation.14 The FSB classified shadow banking’s (or NBFI’s) “economic functions” (EFs) as: (i) management of collective investment vehicles with features that make them susceptible to runs, typical of MMFs, credit hedge funds, real estate investment trusts, (EF1) (ii) loan provision dependent on short-term funding, typical of finance, leasing and consumer credit companies (EF2), (iii) market intermediation dependent on short-term funding, typical of broker-dealers (EF3); (iv) credit creation facilitation, typical of credit insurers, financial guarantors, etc. (EF4); and (v) securitization-based intermediation, typical of securitization or structured finance vehicles (EF5). These five EFs formed the “narrow measure” of NBFI. A broader measure would include other types of funds, e.g., equity funds, exchange-traded funds (ETFs) etc.

The FSB sought to improve NBFI regulation proposing a policy toolkit,15 which prioritized (i) the mitigation of risk exposures by banks to shadow banks, (ii) making MMFs less susceptible to runs, (iii) improving transparency and incentives in securitization, and (iv) mitigating risks in other shadow banking entities, and securities financing transactions.

The FSB policies were echoed by the European Commission,16 which tried to implement most of these reforms, such as a Regulation of Money Market Funds (MMFs17) a tightening of securitization rules, both by directly regulating securitization entities and transactions,18 and indirectly, by adopting Basel III-based onerous prudential requirements on banks’ exposures to securitization,19 and subjected investment firms to bank-like capital requirements,20 and adopted rules for securities financing transactions.21

Interestingly, although most examples of shadow banking risks materialized in US markets, the US was less ambitious and comprehensive in its attempts to regulate shadow banking, with feebler MMFs rules, and a slower and more reluctant adoption of Basel III. This did not prevent it from exiting the GFC earlier. Meanwhile, despite its regulatory zeal, the EU faced a subsequent banking and sovereign debt crisis, and a Non-Performing Loan (NPL) crisis, and today its securitization markets remain subdued.22 Thus, one preliminary lesson seems to be that regulation is important, but strong economic activity and deep, liquid capital markets are important as well.

2.2. Shadow Banking: developments in measurement and regulation in 2011-2023, and current sources of concern

The FSB shadow banking Taskforce identified regulatory priorities. However, shadow banking’s main problem was initially a lack of data. Thus, one of the Taskforce’s main challenges has been to gather data and develop reliable metrics to understand the phenomenon’s size, features and dynamics, and disseminate these by means of periodic reports,23 and an interactive Dashboard.24 Table 1 offers a summary with selected metrics. Some findings are enlightening.

Table 1 offers a summary with selected metrics. Some findings are enlightening.

Source: own elaboration using FSB Dashboard data (2022). USD trill Assets Under Management (AUM).

First, whereas NBFI assets under management (AUM) represent almost half (47,24%) of total financial assets (USD trill 217,9 against 461,2)) the “narrow measure” of NBFI, which the FSB monitors more closely, and represents the closer approximation to “shadow banking” is 13,68% (USD trill 63,1).

Second, the relevance of (narrow) NBFI varies widely across jurisdictions. The jurisdictions with the largest NBFI assets (data for 2022) include the United States (USD trill 19,20) China (USD trill 10,2), the Cayman Islands (USD trill 8,07), Luxembourg (USD trill 4,32), and Ireland (USD trill 3,86). The (narrow) NBFI varies widely, also within the type of entity and “function”.

Third, within the “narrow measure”, “economic function” EF1, i.e., management of collective investment vehicles with features that make them susceptible to runs is, on aggregate, the more significant by far, with 74,3% of AUM in 2022. However, this figure masks important variations across jurisdictions, e.g., EF 2 (finance companies) are important in India, Russia, Indonesia or the UK, broker dealers are important in Japan, South Korea, Hong Kong or Singapore, securitization vehicles are important in Italy, though temporarily (due to the wind down of its still-large stock of NPLs).

Fourth, it is necessary to investigate the combined effect of several characteristics to identify sources of risk.25 Credit assets are a particularly important source of risk, and have grown steadily, including those held by MMFs and other investment funds. Furthermore, the FSB “vulnerability metrics” focus on credit intermediation, maturity transformation, liquidity transformation and leverage. Maturity and liquidity transformation are more present in fixed-income funds (FIFs) or mixed funds, credit intermediation in MMFs, and leverage in financial companies or broker-dealers. Finally, in terms of interconnectedness, banks continue to be net recipients of funds from NBFIs, but this funding has decreased since 2013 (from nearly 8,5% of assets to 6%)), while NBFIs’ funding by banks has increased, but remains relatively low (4,5% of assets). The majority of funding was to and from “other financial institutions”, comprising CCPs, hedge funds, trust companies, and unidentified OFIs, suggesting that, beyond aggregate data, there are jurisdiction-specific dynamics.

2.3. Shadow Banking: developments in measurement and regulation in 2011-2023, and current sources of concern

“Shadow banking” is more evocative than precise, which is bad for policymaking. Shadow banking is not ‘shady’; all NBFI activities are perfectly lawful. Nor ‘new’; players and business models are well established. The change of language, into the more “boring” Non-Bank Financial Intermediation (NBFI) partly reflects this.

The three notes of the FSB framework are (i) financial (in)stability, (ii) regulatory arbitrage, and (iii) credit intermediation outside regular banking. It is the third that separates shadow banking or NBFI’s from other sources of financial instability or arbitrage. In practice, one single concept encompasses two different perspectives, the ‘intermediation’ perspective, and the ‘market’, or ‘money’ perspective. Both show that phenomenon is an old one.

  1. The ‘intermediation’ perspective, typically the defining one,26 characterizes NBFI/shadow banking as a ‘boundary problem’ where banks’ maturity transformation is both necessary and risky, which makes public backstopping necessary, which creates a moral hazard problem, which requires tight prudential regulation, which creates an incentive to ‘migrate’ outside the boundaries of tighter regulation, until the activity outside is too large, and destabilizes the system, requiring intervention and a redrawing of boundaries.27 This narrative partly describes the role of securitization-based shadow banking in the GFC, as well as, e.g., trust companies in the 1908 US crisis,28 or bill brokers in the 1857 crisis in England.29 Many financial instability episodes involved ‘unconventional’ parts of the financial system.30
  2. The ‘market’ or ‘money’ perspective focuses on money markets:31 the market of wholesale money-like claims, e.g., the repo market, grows and becomes more fragile, due to the use of new assets as collateral (e.g., securitized assets) or the participation of new actors, e.g., MMFs as net providers of cash. Then, sudden changes in market sentiment lead to a sudden unwinding of positions (de-leveraging) increasing the risk of liquidity shortages and fire sales, like a tragic version of the musical chairs game. His happened in the GFC, but also in other episodes, like the chains of accommodation bills in XVIIIth century Holland.

2.4. Shadow Banking and controlling money/credit growth: can policymakers have it both ways?

Shadow banking/NBFI is not an anomaly, but a defining feature of the monetary system. The debate over whether “money” is a creation of the market, or a creation of the State is old.33 The reality is that money comprises specific type of claims, e.g., bank deposits, or central bank reserves, which are defined or protected by the law, but are also accepted by the market as a means of exchange/payment.

Money is a debt claim created by contract: bank deposits (the main category of money) are created when a bank identifies a good investment opportunity, grants a loan, and creates a matching deposit.34 Governments can indirectly influence money creation by manipulating market conditions, e.g., central bank policy rates, 35 or by limiting the growth of certain types of leverage, e.g., bank debt, by means of prudential regulation, but the loss of control over the creation of money-like claims is not peripheral: it begins close to the core.

If non-bank market actors use contracts to create easily redeemable money-like claims, the State has even more limited control, and must decide case by case whether such ‘new’ actors are admitted as counterparties of the central bank, and whether they are regulated like banks, e.g., with strict limits on leverage, capital, liquidity, etc.

This will be difficult because contractual conditions will vary. Sometimes the claims will not be money-like, i.e., not redeemable on sight, but short-term, or redeemable on sight, but not at a ‘stable’ given value (e.g., if I have a bank deposit of EUR 1,000, I expect to receive EUR 1,000 upon redemption; if I redeem an investment fund, I can expect the value resulting from a liquidation of my position). Sometimes the entity will secure the liquid, money-like claim with similarly liquid assets, e.g., government bonds.

And here is the catch: “solving” shadow banking requires governments to perform a level, cool-headed and constant exercise that is excessive to expect from humans. Yes, in theory legislators/regulators can look at the data in the abstract, and conclude that entities of type “X”, funded by money-like claims, redeemable on sight at 1/1 value, must be regulated like banks, entities “Y”, funded by claims redeemable on sight not at par, but at liquidation value (or with restrictions like redemption fees or “gates”) must be subject to some bank-like constraints, e.g., limits to liquidity mismatches, and entities “Z”, with short-term (but not money-like) liabilities, and investment in credit assets (loans), must be subject to limits in their leverage. In practice, governments will look at the service the entities provide to their investors and the parties they fund and be reluctant to impose onerous requirements when those services are important for the government or society.

The GFC was full of such examples. The rise of the US securitization market was fueled by US-Government-Sponsored Enterprises (GSEs) (Fannie Mae, Freddie Mac, Ginnie Mae), with leverage higher than banks, and subject to weak supervision,36 because they facilitated housing to millions of Americans.37 MMFs rose as a substitute of bank deposits when Regulation Q capped deposit rates, and (retail) savers sought an equally liquid product to park their savings.38

In other jurisdictions, like China, shadow banking’s Wealth management Products (WMPs) were substitutes of bank deposits, again in a context of limited deposit rates,39 and Local Government Finance Vehicles (LGFVs) fostered real estate development.40 Policymakers tolerated WMP, and enabled LGFVs.

Thus, shadow banking is not “a problem” that can be “solved”. It is a by-product of banking and money, a “grey” area of ‘hybrid’ claims close to money, and ‘hybrid’ entities close to banks, but not quite. By regulating banking tightly, governments create an incentive for business to migrate to the grey area, and they will react slowly because the equivalence between shadow banks and banks will not be exact, and because shadow banking will often plug funding gaps that are important for society (e.g., housing or real estate) or governments (e.g., sovereign debt markets).

Shadow Banking’s Current Problems

3.1. Shadow Banking’s current profiles and risks

Current data suggest that the largest NBFI “function” is the management of funds with features that make them prone to runs (EF1). The main source of risk will be the funds involved in credit markets. This clearly shows in the FSB four policy priorities.

First, the FSB and the IMF reports focus respectively on “private finance”, i.e., private equity-private finance, and “private credit”, i.e., the funding of middle-market firms, too small to issue public debt, and too large for a single bank, as sources of risk (the IOSCO has also stressed its importance).

Upon closer look, however, the FSB analysis provides more questions than answers. Private finance has grown substantially (doubled AUM in the past 4 years, to USD 12 trill) but this includes private equity as well as private credit. The US represents half of private finance’s AUMs, the UK 10%, and the Euro area around 5%; Asia represents 24%, but this includes venture capital. In fact, the FSB acknowledges that loans are a very small share of “other finance institutions” assets, i.e., private credit is small and struggles to point at specific vulnerabilities in Europe or the UK. In the US, where such funds are larger, the IMF Report highlights that North American fund managers manage the practical totality of US private credit funds, but also a large size of funds with focus in Europe, Asia, and other. However, these funds are typically closed-end, with long redemption dates, which limits their maturity and liquidity transformation, and limited leverage. This not only mitigates their risk; it makes it difficult to classify them as “shadow banks”.

Thus, concerns about private credit come from its opacity (more “shadow” than “banking”). Its risks are hypothetical because there is limited knowledge, as private credit falls outside banks’ prudential regulation and bond markets’ disclosures.

Secondly, closer to Europe, the FSB also highlighted the risks of MMFs and short-term funding markets. MMF assets are concentrated in a few jurisdictions, primarily the US, with 58% then the EU, a distant second with 18%, especially in Ireland, France and Luxembourg, and then China, with 17%. MMFs investing in private debt suffered important outflows during the 2020 COVID crisis, both in the US and the EU, despite they had enacted post-GFC reforms following IOSCO’s recommendations (the FSB suggested that IOSCO should revise those recommendations).

The FSB’s July 2024 recommendations built on policy proposals from 2021, and a peer review that analyzed their implementation in February 2024. The FSB proposals try to address MMFs vulnerabilities, with a policy toolkit that includes measures to:

  1. Reduce the likelihood of destabilizing redemptions, by:
    1. Imposing redemption costs on investors, e.g., with “swing pricing” (funds can reduce their NAV when falling below certain thresholds);
    2. Facilitating loss absorption, e.g., with a minimum balance of shares that investors cannot redeem, or capital buffers;
    3. Reducing threshold effects (e.g., in the EU a decline in liquid assets below a certain threshold can trigger the imposition of redemption fees or gates, and a decline in the valuation can transform the MMF from “stable NAV” to “variable NAV”; both incentivize redemptions when close to the threshold) by removing the ties between thresholds and redemption fees and gates, or eliminating stable NAV.
  2. Mitigate the impact of large redemptions, by, e.g., limiting eligible assets, or imposing additional liquidity requirements.

Rather than focusing on one single tool, the FSB gives pros and cons for each tool, and then recommends jurisdictions to choose a combination of coherent tools that is suitable for its market’s vulnerabilities.

Although the single tools are complex, once combined, the idea is not difficult to understand: MMFs should be cash-like, or investment-like: if cash-like, their bank-like risk could be subject to bank-like measures, e.g., asset eligibility, liquidity, or capital buffers; if investment-like, their measures should ensure that they are investment-like, e.g., imposing redemption costs on investors, or removing the stable NAV. Cash-like MMFs could have a limited role in short-term funding markets for corporates (too risky); investment-like MMFs could have a more prominent role.

Third, the FSB focused on open-ended funds’ liquidity risk resulting from liquidity mismatches (i.e., redemption terms not matched by the liquidity of the fund’s assets), and, building on its previous work, the FSB recommended using a “categorization” approach, to align the redemption terms with the liquidity of the underlying assets, e.g., for funds investing mainly in liquid assets, daily dealing; for funds investing in less liquid assets, less than daily dealing, or daily dealing, but with liquidity management tools (LMTs) that pass the cost of redemption onto investors, e.g., swing pricing, anti-dilution levies, etc. The underpinning philosophy is the same as in MMFs: clearer categories avoid the perception that a fund is more liquid than it is. This, however, goes beyond adjusting contractual terms in line with regulation. It requires adjusting investors’ expectations in line with what is socially optimal, to avoid runs.

Fourth and finally, the FSB focused on margining practices. In derivatives markets counterparties to a derivative must post collateral (typically, cash) to keep the derivative going, which includes initial margin (IM) and variation margin (VM), which evolves with the underlying prices. IM and VM must be tailored to the risk of the derivative. In stressed times, e.g., the spikes in energy prices in 2022, market actors are pressed to post cash despite liquidity is scarce, which also exposes weak practices. The FSB recommendations build on a previous consultation on liquidity preparedness, and the joint work by the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), and the IOSCO, which includes several reviews of margining practices.

Recommendations focus on the margining practices of NBFIs participating in derivatives and other markets. They highlight the need that those NBFIs adopt a more structured approach towards liquidity management as part of their governance, improve their liquidity stress testing, to ensure their preparedness in extreme but plausible scenarios, and improve their collateral management to ensure the availability of collateral.

3.2. Current or old challenges?

Shadow banking, or NBFI, is bound to constantly present a different face, but it is a mistake to focus on its superficial details. The reason NBFI presents a perennial challenge is because it is a flip side, a mirror of ‘conventional’ money and banking markets, so ignoring those markets means that any efforts are bound to fail.

Consider MMFs. They have changed since the GFC. Post-GFC reforms have “bifurcated” MMFs to ensure that those offering stable/constant (C)NAV only invest in government debt. In the US this is the majority of MMFs. In the EU, CNAVs must invest in public debt, but they switched their investments from “long” government bond holdings (66% in 2020 to 24% in 2022) to “short” repo market exposures (22% 2020, 67% in 2022). Policymakers will be reluctant to increase the costs (e.g., by imposing capital buffers) for entities that fund a public debt that has ballooned (60% of GDP in 2008 to more than 100% of GDP in 2024 in the US) and/or are key players in the repo market, which is of central importance in Europe.

In any event, the “dash for cash” during the COVID crisis in 2020 affected mostly variable NAV (VNAV) MMFs, such as “prime” funds. However, these funds are a major source of funding for banks, investing heavily in their Commercial Paper (CP) and Certificates of Deposit (CDs). Thus, MMF fragilities are amplified by their impact in banks’ financing, but the real problem (in Europe at least) is that finance is too reliant on banks and not diversified.

Conclusions

Shadow banking is a puzzling phenomenon because it varies depending on the depth at which it is examined. In the abstract, it is a simple idea: financial intermediation consisting in investments funded by money-like or short-term liabilities that tends to avoid the stricter regulation imposed on banks. In more detail, the concrete examples of “shadow banking” or Non-Bank Financial Intermediation (NBFI) vary widely across time and jurisdiction, depending on the relative pressure of different regulatory regimes. The answer to these specific instances, however, normally lies in a combination of more stringent rules on leverage and liquidity for the new types of activities, and a revision of the rules for banks and other regulated institutions, when they are unnecessarily stringent.

Go even deeper, however, and NBFI is like a “mirror” of the financial system’s structure. As such mirror, it tends to offer an unflattering picture, where public authorities try to have their cake and eat it too. Before the Great Financial Crisis (GFC) the rise of shadow banking in the US was prompted by government efforts to facilitate access to housing, using securitization to mobilize secondary markets for that purpose. After the crisis, securitization was the way to clean up bank balance sheets of Non-Performing loans (NPLs) in countries like Italy. In China, despite not having had a major financial crisis, Wealth Management Products (WMPs) and different types of investment vehicles have been convenient sources of financing for a real estate boom. The tightening of bank regulation creates the “motive” for activity to migrate away from banking, yes, but it is normally the features of the financial system, the financing gaps, which need to be plugged with governments help, or acquiescence, which provide the “opportunity”.

As developed economies move past the GFC and the COVID crisis with very large stocks of public debt, parts of shadow banking/NBFI (MMFs and credit funds) evolved to help manage that stock. In the US, it is also adapting to fill the gap in private (corporate) funding, perhaps due to a crowding out by public funding.

In the EU NBFIs help finance bank debt, and banks finance the economy. Indeed, the small size of NBFI in the EU is not necessarily a good thing, as it reflects the lack of funding diversification. Currently, banks remain comparably large, and capital markets comparably small. During the GFC the US suffered a more severe initial shock, but exited the crisis earlier, while the EU linked a financial crisis with a sovereign and ‘conventional’ crisis, of banks and NPLs.

Thus, asking “how can we solve shadow banking?” leads to failure. Asking, like the FSB does, “how can we make NBFI more resilient?” is more constructive, though it requires constant vigilance. Asking “what can shadow banking teach us about our financial system?” is probably the right and pertinent question. It is, however, one that leads to inconvenient truths.

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About the author

David Ramos Muñoz (Badajoz, 1979) is Associate Professor of Commercial Law at Universidad Carlos III de Madrid, and he also teaches regularly at the University of Bologna. He majored in Law and Business Administration (top of his class), and practiced law before undertaking his research Master in Private Law, and his PhD, with a thesis on Structured Finance SPVs.

He is the author of EU Financial Law, Kluwer/CEDAM, 2016, with Marco Lamandini, or The Law of Transnational Securitization (Oxford University Press, 2010), and numerous articles in journals such as the American Bankruptcy Law Journal, Columbia Journal of European Law, International and Comparative Law Quarterly, Capital Markets Law Journal, European Company and Financial Law Review, or European Company Law Review, mainly on the law of financial markets, international contracts, arbitration, and fundamental rights. His research received the Excellence Prize of Carlos III Social Council in 2016 and has benefitted from the ECB Legal Research Program in 2016 and 2015. He is an Academic Board member of the European Banking Institute (EBI) and the European Law Institute (ELI).

Ramos Muñoz is the deputy director of the master’s in international advocacy at Universidad Carlos III, coordinator of the Moot Madrid (http://www.mootmadrid.es/) and responsible for the Carlos III competitive moot court program. He teaches courses on Credit and Banking, Financial Law, Corporate Law, or International Business Law.

He is an Alternate Member at the Appeal Panel for the Single Resolution Board (SRB), a lawyer at the Madrid Bar, an Arbitrator at the Madrid Arbitration Court, and a consultant on cross-border legal issues.