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Shadow Banking

Man in suit by Matthew Henry, Toronto, Ontario, via Unsplash

Yesterday, I mentioned how some art auction houses have become highly attractive to money launderers for anonymous sales and lax lending policies. This is part of a global trend called “shadow banking” which poses significant systemic risks to markets in the U.S. and abroad.

What is it?

Shadow banking is a catch-all phrase for financial services that occur outside of the regular banking and investment system (and typically outside of regulatory control.) It can take many forms including risky financial products, loan-shark operations, off-the-books lending, or auction-house financing by art dealers. Continue reading “Shadow Banking” »