Shriveling Shadow Banking Limits Liquidity and Damages the Economy: CFS Money Supply Statistics (Center For Financial Stability)

November 2014

KEYWORDS:

Authors:

Lawrence Goodman

Organizations:
  • Center for Financial Stability

Summary:

The Center for Financial Stability (CFS) Divisia monetary aggregates and components often reveal
nuances surrounding future moves in the economy and markets as well as a real time perspective of the
US financial system. The November release is no exception.
• “Market finance” (or what some like to call “shadow banking”) is shriveling to the detriment of
the economy and financial market liquidity.
• Access to market finance has shriveled by 45% in real terms since 2008 – the largest cyclical
drop in the last 40 years.