money2-lectures-Lec 21--Shadow Banking, Central Banking

Non bank regulated vs non regulated evasion direct

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Unformatted text preview: hadow” versus “traditional” banking – Bank vs. non-bank – Regulated vs. non-regulated (evasion) – Direct government backstop vs. indirect (unauthorized) • Versus our emphasis on banking evolution – Financial globalization: dollar funding, reserve currency holding • Cf. Shin (2011) “Global Banking Glut and Loan Risk Premium” – Financial revolution: derivatives, risk pricing markets • Imagine a world of ONLY shadow banking Idealization • We abstract from… – – – – – Retail depositors, security investors, traditional banks Securitization process (underwriting, legal basis) Liquidity reserves (Tbills and cas...
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