Shining light on a banking shadowland

Mark Carney has made it clear the FSB's goal is not to kill off shadow banking but drag it into the sunlight, while harnessing its risk appetite and ability to provide alternate liquidity sources.

Nearly three-and-a-half years ago, when the last of the Wall Street heavyweights, Goldman Sachs and Morgan Stanley, sought refuge in the official banking system after Lehman Bros collapsed, it appeared the shadow banking system had been dealt a major blow. After a minor hiatus, however, it appears to have bounced back to the point where the shadow system is now as big as it was before Lehman fell.

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