UK: shadow banking and financial stability - speech by Lord Turner

Lord Turner, the chairman of the Financial Services Authority, delivered a speech yesterday titled Shadow Banking and Financial Instability: see here (text, pdf) and here (slides, pdf). Lord Turner provided a review of what amounts to shadow banking and possible policy responses. He stated that shadow banking must be understood as something deeply intertwined with the core banking system and not separate or parallel from it. He argued that regulatory responses should be biased towards prudence and against, amongst other things, complex interconnectivity and procyclical market contracts.