Ben Bernanke's new blog: interest rates, page-13

Dictionary

It has been done, before, 20 times in fact, but this time it will be different?? Unlikely, and the worm and the world will continue to turn. It appears the funds continue to earn money, and so all happens in the shadows, out of sight and out of mind.

I am far more interested in the other things that happen in the shadows, like the shadow banking system (where the GFC originated from,see below) and the transfer pricing shenanigans.

Perhaps the more interesting question is why the US govt has decided (it must have been a conscious decision) to not bother about resetting the debt limit? and why the main stream press did not have a fit about it, as they did last time?

good luck,

so more on the shadows (and there are an unusual amount in our lovely "international finance system") below

http://www.imf.org/external/pubs/ft/fandd/2013/06/basics.htm

What Is Shadow Banking?

FINANCE & DEVELOPMENT, June 2013, Vol. 50, No. 2
Laura E. Kodres

PDF version​

Many financial institutions that act like banks are not supervised like banks
If it looks like a duck, quacks like a duck, and acts like a duck, then it is a duck—or so the saying goes. But what about an institution that looks like a bank and acts like a bank? Often it is not a bank—it is a shadow bank.
Shadow banking, in fact, symbolizes one of the many failings of the financial system leading up to the global crisis. The term “shadow bank” was coined by economist Paul McCulley in a 2007 speech at the annual financial symposium hosted by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming. In McCulley’s talk, shadow banking had a distinctly U.S. focus and referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation. Commercial banks engage in maturity transformation when they use deposits, which are normally short term, to fund loans that are longer term. Shadow banks do something similar. They raise (that is, mostly borrow) short-term funds in the money markets and use those funds to buy assets with longer-term maturities. But because they are not subject to traditional bank regulation, they cannot—as banks can—borrow in an emergency from the Federal Reserve (the U.S. central bank) and do not have traditional depositors whose funds are covered by insurance; they are in the “shadows.”

Authorities engage

The official sector is collecting more and better information and searching for hidden vulnerabilities. Banking supervisors also are examining the exposure of traditional banks to shadow banks and trying to contain it through such avenues as capital and liquidity regulations—because this exposure allowed shadow banks to affect the traditional financial sector and the economy more generally. Moreover, because many shadow banking entities were either lightly regulated or outside the purview of regulators, the authorities are contemplating expanding the scope of information reporting and regulation—of both entities and the markets they use. And the authorities are making sure that all potential shadow banking entities or activities are overseen in a way that discourages shadow banks from tailoring their behavior to come under the supervision of the weakest (or of no) regulators—domestically or globally.
The authorities are making progress, but they work in the shadows themselves—trying to piece together disparate and incomplete data to see what, if any, systemic risks are associated with the various activities, entities, and instruments that comprise the shadow banking system. ■
mce-anchorLaura E. Kodres is Assistant Director of the IMF’s Monetary and Capital Markets Department.


All a bit too shadowy for me.