2 October 2023
Financial regulators are tightening controls on shadow banking due to hidden risks and the potential impact of rising interest rates. The UK and the Bank of England are actively monitoring “non-banks” such as hedge funds and insurers, which now hold half of global financial assets. This sector’s growth stems from post-2008 regulations that shifted risks outside traditional banking. Recent market disruptions, like the Archegos collapse, have heightened concerns. Current solutions include cautious lending to hedge funds, but comprehensive oversight is still in development.