The Weekend Economists travel the Yellow Brick Road, November 14-15.

[Demeter]

10. Shadow Banking Grows 10% Driven by Lenders in China and Ireland

JUST WHAT THE GLOBAL ECONOMY NEEDS--NOT

http://www.bloomberg.com/news/articles/2015-11-12/shadow-banking-grows-10-driven-by-lenders-in-china-and-ireland

The global assets of the shadow-banking industry grew by $1.1 trillion to about $36 trillion last year, outpacing banks and other financial institutions and driven by growth in the U.S., China and Ireland, according to the Financial Stability Board.

Shadow-banking assets, captured under a new narrower definition designed to better isolate institutions that pose risks to the financial system, amount to 59 percent of gross domestic output and 12 percent of all financial assets in the 26 countries participating in the FSB’s annual survey, the Basel-based regulator said on Thursday.

“Non-bank financing provides a valuable alternative to bank funding and helps support real economic activity,” the FSB said in the report. “However, if non-bank financing is involved in bank-like activities, transforming maturity/liquidity and creating leverage like banks, it can become a source of systemic risk.”

While regulators have reined in excessive risk-taking by banks in the wake of the collapse of Lehman Brothers Holdings Inc. in 2008, they are concerned that lenders might use shadow banking to evade the clampdown and cause risks to build up out of sight of regulators. The Group of 20 nations asked the FSB to keep track of the industry and develop rules to keep it in check...

YUH THINK?