The policy recommendations have been guided by the following five general principles for regulatory measures: •  Focus: Regulatory measures should be carefully designed to target the externalities and risks the shadow banking system creates;  •  Proportionality: Regulatory measures should be proportionate to the risks shadow banking poses to the financial system;  •  Forward-looking and adaptable: Regulatory measures should be forward-looking and adaptable to emerging risks;  •  Effectiveness: Regulatory measures should be designed and implemented in an effective manner, balancing the need for international consistency to address common risks and to avoid creating cross-border arbitrage opportunities against the need to take due account of differences between financial structures and systems across jurisdictions; and  •  Assessment and review: Regulators should regularly assess the effectiveness of their regulatory measures after implementation and make adjustments to improve them as necessary in the light of experience.
Size of the shadow banking sector Efficient oversight of any sector requires monitoring which involves data collection and analysis. Given its growing significance, monitoring of the global shadow banking system is being very vigorously pursued.