Thus, I would prefer to call it “non-bank banking”. But still, it is a place where systemic risks can easily emerge because of unregulated liquidity and maturity transformation, because of the build-up of leverage, and because of procyclicality.
In order to prevent the emergence of systemic risks in the shadow banking system it is therefore essential to ensure that measures are implemented consistently across sectors. And this may well include regulation. Furthermore, adequately capturing these risks presupposes that they are identified and measured. Shadow banking activities, however, are beyond the reach of bank reporting requirements.