2  BIS central bankers’ speeches  This tendency is of particular concern, given the role the shadow banking sector played in the run-up to the crisis. In the final years of the boom, when complacency about liquidity reached its zenith, the scale of shadow banking activity exploded.
The value of structured investment vehicles, for example, tripled in the three years to 2007, and credit default swaps grew sixfold. The feedback to the regulated sector was pernicious. Financial institutions, including many banks, had come to rely on high levels of market and funding liquidity.