Tiff Macklem, the senior deputy governor of the Bank of Canada, highlights challenges of regulating the shadow banking sector in the face of higher capital and liquidity requirements.

In a speech delivered to the G-20 Workshop on 7 July 2011 Paris, France, Macklem said: "The existing prudential regulatory framework was designed around banks whose credit-intermediation activities are closely regulated and supervised, as well as backstopped with deposit insurance and central bank liquidity. By