What shadow banks mean for financial regulation
The current financial crisis has highlighted the growing importance of the shadow banking system, which grew out of the securitisation of assets and the integration of banking with capital market developments, a new paper published by the New York Federal Reserve notes.
Securitisation was intended to transfer risk but actually led to increased fragility "by allowing banks and other intermediaries to "leverage up" by buying one another's securities, the paper contends.
Looking forward, one
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