Over time, this network had become a veritable “shadow banking system”, operating outside all supervisory control. As was widely reported, during this phase many banking crises required government support measures. Italy was one of the least affected countries, and no Italian bank was placed under public control.
The Bank of Italy prevented the creation of any “shadow banking system” in Italy, and banks’ liquidity positions were monitored daily. London’s much vaunted “light touch” approach to supervision was never adopted in our country.