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Shadow banking and the global financial ecosystem

Pozsar, Z., (2013), “Shadow banking and the global financial ecosystem”, VoxEU, 07 Νοεμβρίου.  

Modern banks operate in a complex global financial ecosystem. This column argues that regulating banks properly requires updating our ideas about how they operate. Modern banks finance bond portfolios with uninsured money market instruments, and thus link cash portfolio managers and risk portfolio managers. Gone are the days when banks linked ultimate borrowers with ultimate savers via loans and insured deposits. The Flow of Funds should therefore be updated to reflect the new realities of the global financial ecosystem.

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