authority. while the bank readies itself to take on more regulatory responsibilities on the insurance side, south africa, through its current supervisor, the financial services board, is already a respected partner in the international association of insurance supervisors, having been one of the seven co - founders in 1994. financial regulatory standard - setting bodies such as the financial stability board and the basel committee on banking supervision have expanded their governance structures to be more representative and to reflect the globalised nature of the financial system. this includes considering the particular role of central banks as direct financial supervisory authorities, or where they act in an advisory role to their governments. as mentioned earlier, the bank is actively engaged in the activities of international financial standard - setting bodies as well as the activities of the g - 20 forum and the imf. to name but two examples, in 2009 the bank formally joined the membership of the basel committee on banking supervision and of the committee on payments and market infrastructures ( formerly known as the cpss : the committee on payment and settlement systems ). through national treasury, south africa has been a plenary member of the financial stability board since 2010, and in early 2015 was allocated a second seat along with five other emerging - market countries at the plenary table. the bank has assumed the position of an additional plenary member and, together with national treasury, can use this opportunity to influence the agenda to focus on issues that especially affect emerging markets. it should, however, be clear that even before the bank formally became a member of the above - mentioned bodies, it continuously followed and, where appropriate, aligned its own policies and procedures with the guidance and principles issued by these international standard - setting bodies. south africa ’ s membership of these international standard - setting bodies is accompanied with the requirement that we comply with the standards developed by these bodies. this compliance process includes annual imf article iv consultations, imf / world bank financial system stability assessments ( fssas ) and reports on observance of standards and codes ( roscs ), peer reviews by other g - 20 member countries on our framework for economic growth, financial stability board country peer reviews, and the basel committee on banking supervision process to determine the adoption of basel iii capital and liquidity bis central bankers ’ speeches standards for banks through the regulatory consistency assessment programme ( rcap ). the financial stability board released its review on south africa in 2013, the imf completed an fssa and three roscs in 2014, and the basel

european emerging markets shows that tighter regulatory restrictions on non - core bank activities ( like bank involvement in securities markets, insurance, real estate, ownership of non - financial firms, etc. ) and higher minimum capital requirements are associated with lower bank lending standards abroad. 23 moreover, macro - prudential policy may leak due to regulatory arbitrage. credit could be provided to the economy via less capital - intensive channels, for instance via securitisation. 24 macro - prudential measures can also encourage the so - called “ race to the bottom ”, whereby capital and liquidity is moved around within the group to the country with the lowest requirements. in both cases, the shadow banking sector may play an important role in facilitating such a regulatory arbitrage measures can and should be envisaged to prevent “ regulatory leakages ” of macro - prudential policies. for instance, crd iv introduces automatic reciprocity for countercyclical capital buffer up to 2. 5 %. this means that if any of the eu countries introduces a countercyclical capital buffer to smoothen the financial cycle in its economy, all other eu countries are bound by law to impose the same capital surcharge on banks ’ cross - border exposures to the country introducing the measure. this prevents the so - called negative in - ward spillovers, whereby branches of foreign banks increase lending to circumvent the restrictions set by the macro - prudential authority on local banks. without reciprocity, macro - prudential policy is prone to leakages. ongena, popov and udell ( 2013 ). see zochowski ( 2014 ). bis central bankers ’ speeches 4. 3 enhancing the transparency of the shadow banking sector a third area where substantial progress needs to be made is the statistical treatment of the shadow banking sector. the ability of macro - prudential policy to address the risks materialising in the financial system is hindered by the opaqueness of that sector. a key priority for the ecb and the european system of central banks is to enhance its transparency and to develop a statistical system able to quantify its size, composition and risk exposure. a main challenge in measuring the role of shadow banking is to define a perimeter for the activities it performs. for the euro area, a measure can be obtained using the quarterly ecb / eurostat euro area accounts and the ecb ’ s monetary statistics. 25 however, measures of the size of the shadow