The Nonbank-Bank Nexus and the Shadow Banking System
IMF Working Papers, December 1, 2011
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- The Nonbank-Bank Nexus and the Shadow Banking System
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Bibliographic details
- Authors: Manmohan Singh, Zoltan Pozsar
- Published: December 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781463927233.001
Summary and central thesis
- The present way of thinking about financial intermediation does not fully incorporate the rise of asset managers as a major source of funding for banks through the shadow banking system.
- Asset managers are dominant sources of demand for non-M2 types of money and serve as source collateral "mines" for the shadow banking system.
- Banks receive funding through the re-use of pledged collateral "mined" from asset managers.
Key quantitative estimates
- Size of the shadow banking system in the U.S. may be up to $25 trillion at year-end 2007.
- Size of the shadow banking system in the U.S. may be up to $18 trillion at year-end 2010.
- Pages: 19
- Volume: 2011
- Issue: 289
- Series: Working Paper No. 2011/289
- DOI: https://doi.org/10.5089/9781463927233.001
- Stock No: WPIEA2011289
- ISBN: 9781463927233
- ISSN: 1018-5941
Findings and implications for monitoring
- Asset managers’ demand for non-M2 types of money implies monitoring the shadow banking system will warrant closer attention well beyond the regulatory perimeter.
- Re-use (rehypothecation) of pledged collateral is a central mechanism through which the shadow banking system funds banks.
Policy recommendations and regulatory considerations
- Regulators will need to consider the re-use of pledged collateral when defining bank leverage ratios.
- Monitoring frameworks should explicitly account for asset managers as dominant sources of demand for non-M2 types of money and as sources of pledged collateral to the shadow banking system.
Subject coverage and keywords
- Subjects: Asset and liability management; Asset management; Banking; Collateral; Commercial banks; Financial institutions; Financial services; Securities; Shadow banking
- Keywords: asset; Asset management; asset manager; asset manger; assets of the bank; bank; bank X; collateral; Commercial banks; commercial paper; Global; holding company; maturity transformation; off-balance sheet leverage; rehypothecation; securities; securities borrower; securities lender; Shadow banking; shadow banking system; source collateral; WP; Y. Thus FoF
Manmohan Singh, and Zoltan Pozsar. "The Nonbank-Bank Nexus and the Shadow Banking System", IMF Working Papers 2011, 289 (2011), accessed 9/16/2026, https://doi.org/10.5089/9781463927233.001
Content in this bundle
- 1. A Simple Financial Intermediation Framework