IN 2007, bond market guru Bill Gross coined the term “shadow banking” to illustrate the role of non-bank institutions in creating money-like credit that could implode and affect the traditional banking system.
Four years later, the Financial Stability Board (FSB) finally gave its initial recommendations on how to oversee the shadow banking system to G20. Last month, FSB published its Monitoring Report on Global Shadow Banking, revealing that the system rose from US$26 trillion in 2002 to US$67 trillion in 2011, roughly 25% of total global financial intermediation.