There is much confusion about what shadow banking is. Some equate it with securitization, others with non-traditional bank activities, and yet others with non-bank lending. Regardless, most think of shadow banking as activities that can create systemic risk. This paper proposes to describe...

The paper focuses on two functions of shadow banking: securitization and collateral intermediation. It describes operations of the shadow banking system, demand factors, systemic risks, and associated policy priorities