One, indirect approach which involves regulating banks’ exposure to shadow banking system. Second, a direct approach where macroprudential measures are taken to address risks in securities lending and repo transactions. The third approach is regulation of shadow banking activities through disclosure obligations and restrictions on activities and the fourth approach is the regulation of shadow banking entities, i.e.
imposing bank like regulation on these entities, limiting maturity transformation and leverage. FSB has published the “Initial Integrated set of recommendations to strengthen oversight and regulation of shadow banking” and the related responses received.