Other members of this grey zone of the financial system include US money market funds and leveraged investors, such as hedge funds. Although these actors were not at the forefront of the current crisis, they still represent a potential source of systemic risk, not least owing to their business relationships with large regulated banks.
In individual, tight markets, they can also trigger and significantly amplify market reactions or act as a catalyst for a general reassessment of risks in the financial markets. This example serves to show that it is the type of business being conducted and not an agent’s formal status which should determine the type of regulatory treatment.