In the Market: How regulators are using banks to illuminate shadow banks

The Federal Reserve has proposed new rules that would allow it to gather granular details about banks’ exposure to shadow banks, a move that shows how regulators are trying to understand the risks there and the limits of that approach.

Shadow banks, a catch-all term for non-bank financial institutions like private funds and mortgage servicers, are lightly regulated and opaque.

Regulators and industry experts have expressed growing concerns about systemic risks that might be hiding there, especially in areas such as private credit and lending to private funds as interest rates remain higher for longer than the market expected. Shadow banks have grown as regulations have made it more expensive for banks to lend in some areas.

Source: REUTER