Shadow banking as part of the maximising finance for development agenda

November 2018: Following their annual meeting in October, the IMF and WBG propose to use shadow banking to close the finance gap for sustainable development. There is a strong resistance towards this shift across the financial sector due to shadow banks being less regulated.

Information

Following their annual meeting in October, the IMF and World Bank propose to use shadow banking to close the finance gap for sustainable development. There is a strong resistance towards this shift across the financial sector due to shadow banks operating outside the traditional banking framework. Shadow banks include institutions such as hedge funds, money market funds and structured investment vehicles.

Applicability

Shadow banking could help to redirect private capital flows towards financing decarbonisation measures, amongst others. However the potential benefits need to be weighed against the risks associated with reliance on entities that are less regulated and less transparent.

News