by Zoltan Pozsar, Tobias Adrian, Adam Ashcraft, and Hayley Boesky – FRBNY Economic Policy Review
Shadow banking activities consist of credit, maturity, and liquidity transformation that take place without direct and explicit access to public sources of liquidity or credit backstops. These activities are conducted by specialized financial intermedia ries called shadow banks, which are bound together along an intermediation chain known as the shadow banking system (see “The Shadow Banking System” Online Appendix)
In the shadow banking system, credit is intermediated through a wide range of securitization and secured funding techniques, including asset-backed commercial paper (CP), asset-backed securities (ABS), collateralized debt obligations (CDOs), and repurchase agreements (repos). While we believe the term “shadow banking,” coined by McCulley (2007), to be a somewhat pejorative name for such a large and important part of the financial system, we have adopted it for use here.
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