Regulating the Shadow Banking System

The video discusses the regulation of the over-the-counter derivatives market and its significance in managing the shadow banking system. It contrasts traditional asset management with modern finance, where risk exposure can be achieved without holding risky bonds. The shadow banking system is described as a mirror image of traditional finance, investing in risky bonds but buying insurance and funding through the money market. The video also highlights the economic implications of increased money supply and credit expansion, and emphasizes the role of dealers in managing risk and regulation within the shadow banking system.

What are the implications of the growth in money supply and credit expansion on the economy?

What role do dealers play in the context of risk exposure in the financial system?