Part 8/9:
Regulatory Challenges and the Path Forward
The unique nature of shadow banks complicates regulatory efforts; they do not fit neatly into the traditional categories that regulators use to monitor risk. The focus on legacy banks and outdated regulations has overlooked the realities of how the financial landscape has shifted.
To navigate these complexities, regulators need to enhance their oversight capabilities and re-evaluate existing frameworks to incorporate findings related to shadow banking. Increasing transparency should be a priority to better understand the risks that shadow banks pose to the financial system, including threats stemming from their interconnectedness and dependency on wholesale funding sources.