By Brooke Masters in London
Shadow banking poses a constantly changing threat to broader financial stability and has to be closely supervised and regulated to ensure it does not foster “unsafe” borrowing and exacerbate economic boom and bust cycles, the UK’s leading financial regulator has said.
The sprawling array of non-banks that extend credit and provide other bank-like services are “not something parallel to and separate from the core banking system, but deeply intertwined with it ... We need to ensure that our regulatory response appropriately covers shadow banking as well as banks,” Lord Turner told an audience at the Cass Business School in London.
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