The lure of shadow banking
Shadow banks helped cause the financial crisis. Better regulated, they could help avert the next one
MARK CARNEY, governor of the Bank of England and head of the Financial Stability Board (FSB), an international watchdog set up to guard against future financial crises, was recently asked to identify the greatest danger to the world economy. He chose shadow banking in the emerging markets. Shadow banking certainly has the credentials to be a global bogeyman. It is huge, fast-growing in certain forms and little understood—a powerful tool for good but, if carelessly managed, potentially explosive.
This article appeared in the Leaders section of the print edition under the headline “The lure of shadow banking”
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