Foreign shadow banking entities provide funding to German banks, especially in US dollars. German credit institutions are also continuing to operate shadow banking entities abroad which have been given guarantees and liquidity lines by their domestic parents. Lastly, shadow banks such as hedge funds impact on market liquidity.
The third story I'd like to discuss highlights a more impressive achievement of the U.S. economy, the surge in labor productivity growth from about 1-1/2 percent annually in the two decades preceding 1995 to roughly 3 percent in the period since then. This surge is viewed as having several important consequences.