BoE Paul Tucker Issues Dark Pool and Shadow Bank Warning

Regulators need to “up their game” in overseeing hedge funds and shadow banks as risky pools of capital build up beyond the heavily scrutinized world of traditional banking, one of the world’s top central bankers has warned.

Paul Tucker, the Bank of England’s outgoing deputy governor, said in an interview with the Financial Times that it would be “absolutely disastrous” if the economic fragility of banks was recreated outside the mainstream banking sector.

He drew an explicit parallel between the current situation and 2004, when super-low rates sowed the seeds for a search for yield that culminated in the crash of 2007-09.

“The west is in the course of repairing itself from the past crisis; the Western world needs to be very careful that it doesn’t brew another one,” he said. “This is exactly what happened in the first part of the last decade.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza