3.3  Let’s not overlook the shadow banking system  The third regulatory challenge I want to address is the necessity to extend our reform efforts beyond the banking system. The stricter rules imposed on banks via Basel III and the rules for SIFIs entail the realistic danger that activities will be shifted to less regulated areas.
Therefore, it is imperative for us to better illuminate the fringes of the financial system. In other words, we must closely monitor and regulate what is commonly referred to as the shadow banking system. Whether a market participant is classified as belonging to the shadow banking system should depend not so much on its institutional type but on its activities.