Supervisors seek to manage shadow banking risks

New capital and liquidity rules may force risk outside the banking industry – an intended consequence of the regulations. But is this a good thing, and how will supervisors monitor the complex, shadowy ways in which risk can be transferred and transformed? By Duncan Wood

Mauro Grande

It’s a lesson children learn early: if you squeeze a lump of dough or a ball of clay, its volume doesn’t actually shrink – it just gets redistributed. The same is true of financial system risk. But while a child’s experiments may result in a lumpy biscuit or a wonky giraffe, redistributing risk within the financial system is a far more dangerous exercise.

Regulators have started by squeezing the banking industry in the form of new capital and liquidity rules – but it’s not obvious where the risk

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here