There is much confusion about what shadow banking is and why it might create systemic risks. This column presents shadow banking as ‘all financial activities, except traditional banking, which require a private or public backstop to operate’. The idea that shadow banking is something that needs a backstop changes how we think about regulation. Although it won’t be easy, regulation is possible.Vox.eu
What is shadow banking?
Stijn Claessens, Assistant Director in the Research Department of the International Monetary Fund, Professor of International Finance Policy at the University of Amsterdam and CEPR Research Fellow, and Lev Ratnovski, Economist, Research Department, IMF
