From The Daily Upside, July 2:
If Ireland and Luxembourg want to shine a brighter light on shadow banks, they’re going to need a lot more voltage.
The two European countries are calling for stricter global regulations of a sector that now manages roughly half the world’s financial assets, the Financial Times reported last weekend.
Going to the Dark Side
The past decade has seen a rapid expansion in the shadow banking system — essentially banking activities by just about anything that isn’t really a bank: hedge funds, private equity groups, mortgage lenders, and even well-known investment firms like Goldman Sachs and Morgan Stanley. The rationale behind them seemed plausible: to provide alternative sources of funding to corporate borrowers who wouldn’t need to rely on a limited lender base.And they’re called shadow banks for a reason: they’re largely free from bank regulations and safeguards. And as we saw last fall in the FTX crypto breakdown, blurry financial lines among alternative lenders are exposed in a hurry when these funds rapidly grow their financial assets, take on too much leverage, and interest rates start jumping higher. Ireland and Luxembourg had their own bitter taste of this last fall when the Bank of England was forced to intervene with a bond-buying program to counteract rapid selling by funds residing in those two countries.
While countries can make their own shadow banking rules, regulators in Ireland and Luxembourg — where the sector manages roughly $10 trillion in assets — are calling for global standards:....
....MUCH MORE
If interested see also:
"China Shadow Banking Defaults Surge"
"ECB warns that shadow banking could trigger next financial crisis"
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
"Is Ireland vulnerable again as the world’s vast shadow banking system starts to crack?"
