‘Shadow Banking’ Still Thrives, System Hits $67 Trillion


John O’ Donnell and Douwe Miedema
Reuters
November 19, 2012

The shadow banking system – blamed for aggravating the financial crisis – grew to a new high of $67 trillion globally last year, a top regulatory group said, calling for tighter control of the sector.

A report by the Financial Stability Board (FSB) on Sunday appeared to confirm fears among policymakers that the so-called shadow banking system of non-bank intermediaries continues to harbour risks to the financial system.

The FSB, a task force from the world’s top 20 economies, also called for greater control of shadow banking, a corner of the financial universe made up of entities such as money market funds that has so far escaped the web of rules that is tightening around traditional banks.

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