Shadow Banking System: Definition, Examples, and How It Works: Examples of shadow banks or financial intermediaries not subject to regulation include hedge funds, private equity funds, mortgage lenders, and even large investment banks. The shadow banking system can also refer to unregulated activities by regulated institutions, which include financial instruments like credit default swaps. https://www.investopedia.com/terms/s/shadow-banking-system.asp Crash Landing 2.0? Traditional banks are deeply embedded in the shadow banking sector through trading relationships, custody and clearing (packaged as prime broking services). Some are minority investors in these off-balance-sheet vehicles as well arrangers of capital. Banks also provide leverage, often using derivative products or other off-balance sheet structures. Alternatively, they provide direct funding – ‘lending to the lender’- frequently backed by collateral. As the collapse of hedge fund Archegos illustrated, the extent to which it eliminates risk is debatable. https://www.nakedcapitalism.com/2023/03/...-2-the-usual-suspects.html Commercial property loans are joining deposit flight and bond portfolios as the biggest perceived risk. Fears mount that further retreat from real estate lending could lead to wider credit crunch. https://www.ft.com/content/c172f9f4-0175-40ea-bcb5-01026dddf8ee
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