Shadow Banking - FEDERAL RESERVE BANK of NEW YORK

Museum & Visits Regional Economy Data & Statistics Careers Blog Press Center

About the New York Fed
- About the New York Fed
- What We Do
- Who We Are
  - Bank Leadership
  - Diversity and Inclusion
- Communities We Serve
- Governance
- More About Us
- At the New York Fed, our mission is to make the U.S. economy stronger and the financial system more stable for all segments of society. We do this by executing monetary policy, providing financial services, supervising banks and conducting research and providing expertise on issues that impact the nation and communities we serve.
  
  The New York Innovation Center bridges the worlds of finance, technology, and innovation and generates insights into high-value central bank-related opportunities.
  
  Do you have a request for information and records? Learn how to submit it.
  
  Learn about the history of the New York Fed and central banking in the United States through articles, speeches, photos and video.
Markets & Policy Implementation

Economic Research
- Economic Research
- U.S. Economy
  - Consumer Expectations & Behavior
  - Growth & Inflation
  - Labor Market
  - Financial Stability
  - Banking
- REGIONAL ECONOMY
- RESEARCHERS
  - PUBLICATIONS
  - RESEARCH CENTERS
  - CALENDAR

Financial Institution Supervision
- Financial Institution Supervision
- Supervision & Regulation
  - Circulars
  - Regulations
- Reporting Forms & Instructions
  - Reporting Forms
  - Correspondence
- Bank Applications
- Consumer Protection
  - Community Reinvestment Act Exams
  - Frauds and Scams
- As part of our core mission, we supervise and regulate financial institutions in the Second District. Our primary objective is to maintain a safe and competitive U.S. and global banking system.
  
  The Governance & Culture Reform hub is designed to foster discussion about corporate governance and the reform of culture and behavior in the financial services industry.
  
  Need to file a report with the New York Fed? Here are all of the forms, instructions and other information related to regulatory and statistical reporting in one spot.
  
  The New York Fed works to protect consumers as well as provides information and resources on how to avoid and report specific scams.
Financial Services & Infrastructure
- Financial Services & Infrastructure
- Financial Services & Operations
- Financial Market Infrastructure & Reform
- The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
  
  The New York Innovation Center bridges the worlds of finance, technology, and innovation and generates insights into high-value central bank-related opportunities.
  
  The growing role of nonbank financial institutions, or NBFIs, in U.S. financial markets is a transformational trend with implications for monetary policy and financial stability.
  
  The New York Fed offers the Central Banking Seminar and several specialized courses for central bankers and financial supervisors.
Community Development
& Education

Economic Policy Review Executive Summary

Shadow Banking

Recapping an article from the December 2013 issue of

Contact authors

the Economic Policy Review, Volume 19, Number 2

View full article PDF

16 pages / 248 kb

Authors: Zoltan Pozsar, Tobias Adrian, Adam Ashcraft, and Hayley Boesky

Disclaimer
Index of executive summaries

The rapid growth of the market-based financial system since the mid-1980s has changed the nature of financial intermediation.
Within the system, “shadow banks” have served a critical role, especially in the run-up to the 2007-09 financial crisis.
Shadow banks are financial intermediaries that conduct maturity, credit, and liquidity transformation without explicit access to central bank liquidity or public sector credit guarantees.
The banks intermediate credit through a variety of securitization and secured funding techniques, including asset-backed commercial paper and securities, collateralized debt obligations, and repos.
New York Fed authors Adrian and Ashcraft, with former colleagues Boesky and Pozsar, analyze the institutional features of shadow banks, their economic roles, and their relation to traditional banks.
They emphasize that an understanding of the “plumbing” of the shadow banking system is an important underpinning for any study of financial system interlinkages.
The authors observe that while many reform efforts are focused on remediating the excesses of the recent credit bubble, increased capital and liquidity standards for depository institutions and insurance companies are likely to heighten the returns to shadow banks.
Shadow banking is therefore expected to be a significant part of the financial system, although quite possibly in a different form, for the foreseeable future.

Accompanying the article is “The Shadow Banking System,” a map of the funding flows in the system.

About the Authors

Zoltan Pozsar is a senior advisor at the U.S. Treasury Department’s Office of Financial Research; Tobias Adrian is a vice president and Adam Ashcraft a senior vice president at the Federal Reserve Bank of New York; Hayley Boesky is a vice chairman at Bank of America Merrill Lynch.

Disclaimer

The views expressed in this summary are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System.

By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement.