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The Nonbank-Bank Nexus and the Shadow Banking System


  • Manmohan Singh
  • Zoltan Pozsar


The present way of thinking about financial intermediation does not fully incorporate the rise of asset managers as a major source of funding for banks through the shadow banking system. Asset managers are dominant sources of demand for non-M2 types of money and serve as source collateral ?mines' for the shadow banking system. Banks receive funding through the re-use of pledged collateral ?mined' from asset managers. Accounting for this, the size of the shadow banking system in the U.S. may be up to $25 trillion at year-end 2007 and $18 trillion at year-end 2010, higher than earlier estimates. In terms of policy, regulators will need to consider the re-use of pledged collateral when defining bank leverage ratios. Also, given asset managers' demand for non-M2 types of money, monitoring the shadow banking system will warrant closer attention well beyond the regulatory perimeter.

Suggested Citation

  • Manmohan Singh & Zoltan Pozsar, 2011. "The Nonbank-Bank Nexus and the Shadow Banking System," IMF Working Papers 11/289, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/289

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    References listed on IDEAS

    1. Arvind Krishnamurthy & Annette Vissing-Jorgensen, 2007. "The Demand for Treasury Debt," NBER Working Papers 12881, National Bureau of Economic Research, Inc.
    2. Perry Mehrling, 2010. "The New Lombard Street: How the Fed Became the Dealer of Last Resort," Economics Books, Princeton University Press, edition 1, number 9298, June.
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    Cited by:

    1. repec:bis:bisifc:46-19 is not listed on IDEAS
    2. Anna Maria Agresti, 2016. "Shadow banking: some considerations for measurements purposes," IFC Bulletins chapters,in: Bank for International Settlements (ed.), Combining micro and macro data for financial stability analysis, volume 41 Bank for International Settlements.
    3. Menno Broos & Krit Carlier & Jan Kakes & Eric Klaaijsen, 2012. "Shadow Banking: An Exploratory Study for the Netherlands," DNB Occasional Studies 1005, Netherlands Central Bank, Research Department.


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