I've forgotten how big the shadow banking ecosystem is but it's very large.
From the Ireland's Business Post, March 26:
Irish domiciled funds in growing shadow banking sector now account for over $4.2trn in assets
The shadow banking sector is the “soft spot in the financial system” and could trigger the next financial crisis, the vice-president of the European Central Bank (ECB) has warned.
In the aftermath of the rescue of Credit Suisse last week, Luis de Guindos told the Business Post that he believed the European banking sector was “sound and resilient”, but the non-bank sector “could be a source of problems for the whole financial system”.
The non-bank sector involves firms which are engaged in bank-like activities, but are neither registered nor regulated as banks. These include the likes of funds, insurance firms, venture capitalists and currency exchanges. It is also commonly known as the “shadow banking” or “market-based finance” sector.
In an exclusive interview with the Business Post, De Guindos warned that firms in this sector had taken “a lot of risks” during the period of low interest rates which could now be exposed by rate rises, and could affect the wider financial system.
De Guindos said he did not think the recent turmoil in the US or Europe had exposed fresh systemic weaknesses in the European banking sector. However, he expressed concern about what may happen in the non-bank sector, which he said had grown to become a substantial part of the European financial system in the last decade.
“In the case of Credit Suisse and the American banks, there were specific and idiosyncratic factors. Our main concern in terms of financial stability is the situation of the non-banks. This has been the case for some years, and it is the soft spot in the financial system,” De Guindos told the Business Post....
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Raising the question: How exposed to the shadow bankers was Credit Suisse? And who else has big exposure?
On the first question, Myret Zaki, who has looked at shadow banking a few times, seems to think the answer is "A fair amount.":
L’arbre Credit Suisse cache la forêt du «shadow banking»
And a few years ago:
https://themarket.ch/meinung/how-the-shadow-banking-system-became-the-reference-market-ld.2399
And a few days ago:
