An Interim Conclusion: Shadow Banking as Market-Based Financing
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Nijs formulates some interim conclusions on the shadow banking sector and the segments discussed in previous chapters. More importantly he addresses the question regarding the legitimacy of the trend initiated by regulators and supervisors in 2015 to reframe shadow banking into market-based finance. The positive reformulation should help to embrace shadow banking as part of the global financial infrastructure and a complement to traditional banking, which admittedly can under distress bring an economy down. But renaming the sector changes nothing intrinsically, unless one tends to believe that the shadow banking segments are now properly regulated, which is the dominant self-serving opinion of many regulators and supervisors around the world. But a lot still needs to happen to go in a safe way from shadow banking to market-based finance. And even if we do, it will not be without implications, as the taxpayer will then underwrite the market as such rather than the shadow banking segments and their activities, a topic important enough to spill over into volume II of the handbook.