During this time, the Canadian non-bank ABCP sector – a classic shadow banking activity – also collapsed.7 Only the Herculean efforts of the public and private sector through the Montréal Accord could resolve this debacle. We should all hope that the lessons of these sorry episodes remain fresh in the minds of investors, banks and regulators for some time.
We don’t want to see complicated factors (such as interest transfer) intervening trading rates to make trading rate and quoted Shibor rate further apart. The solution of this problem involves many aspects such as internal management, credit approval and delegation of power to branches.