Shining light into the shadows

What might shadow banking include?

Private equity funds
The companies run by investment specialists that channel capital, often raised from financial institutions, into commercial projects.

Money-market funds
Short-term investment vehicles that tend to invest in very low-risk securities such as companies' commercial paper or government securities. They pay very low rates of interest and dividends.

Hedge funds
Investment funds that aim to achieve a return on an asset irrespective of the current state of the market. They have huge minimum investment levels. Investors are often pension funds and large financial institutions.

Special-purpose vehicles
Entities created for a specific purpose, normally for a limited amount of time, into which companies transfer debt. This is designed to protect the company from financial risk associated with that debt. They are often used to help companies fund a large specific project without putting the rest of the company at risk.

Securitisation
Process of pooling assets and converting them into securities that can then be traded to increase liquidity.

Exchange Traded Funds
A portfolio of assets such as bonds, currencies or stocks that are traded on an exchange.

Repurchase transactions (‘repos')
Transactions in which one party sells securities to another and agrees to buy them back at a set price later.