A run may lead to liquidity bottlenecks which can only be cleared by rapid deleveraging. That in turn may contribute to a collapse in prices on the financial markets, and thus exacerbate the problems in a procyclical fashion. In addition, the structure of many of the transactions conducted in the shadow banking system means that the participants are closely interconnected.
Thus, contagion effects within the system are highly likely. These systemic risks within the shadow banking system may then spill over into the regular banking system, which is often directly or indirectly linked to the shadow banking system. Thus, the shadow banking system may well be a source of systemic risk. Accordingly, it is very high up on the G20 reform agenda.