Shadow Banking System

Shadow Banking System

The term “shadow market” conjures up images of illegal or otherwise shady trade deals but not all shadow markets are nefarious in nature. A robust “shadow” banking system provides services similar to those of traditional banks, but with the added benefit of creating convenience in services and reducing unnecessary tasks. Such institutions may include hedge funds , insurance companies, and private equity funds . The rapid growth of the financial system since the mid-1980s has changed the nature of financial intermediation. Within the system, in fact, financial intermediaries other than banks played a critical role, especially in the period preceding the financial crisis.

The phenomenon is called Shadow Banking

That complex of institutions and financial intermediaries. That provide banking services without being subject to the relevant regulation. They are outside the scope of application of the Japan Phone Number List rules inherent to it. The financial crisis of 2007/2008 led, in the first instance. To a worldwide awareness of the changes that have occurred in the structure of the financial system. As well as a rethinking of both the general regulatory structure of the system and the macro-prudential policy. In this context, a decisive role was played by the Shadow Banking System ; the expansion of this system was largely due to the decision taken by several banks.

In the years preceding the crisis

Their activities characterized not only by high interest margins but also by a strong risk profile: transformation of maturities and liquidity but also the use of financial leverage in Mexico WhatsApp Number List derivative instruments. In December 2010 the Financial Stability Board decided to set up a task force. Whose priority was to collect data on the phenomenon in question. According to what was originally found. Different types of intermediaries operated in the system described: money market funds, private equity companies , hedge funds. Insurance companies and companies controlled by financial and banking institutions such as SPVs ( Special Purpose Vehicles ) and SIVs ( Structured Investment Vehicles). ).