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European Central Bank

Rulemaking proves tricky when dealing with shadow banking

"Regulators around the world are struggling to keep pace with the constantly evolving shadow banking sector, as they grapple with gaps in their understanding of the financial system and inter-agency turf wars play out in key jurisdictions.

"While the broad concept of shadow banking is easy to sketch out – essentially lending or other credit provision by groups other than banks – it is proving far harder to write rules for the sector’s menagerie of entities ranging from money-market mutual funds to peer-to-peer lenders and broker-dealers.