Banking

ECB warns that shadow banking could trigger next financial crisis

Irish domiciled funds in growing shadow banking sector now account for over $4.2trn in assets

Luis de Guindos, vice-president of the European Central Bank, who says the non-bank sector ‘could be a source of problems for the whole financial system’. Picture: Bloomberg

The shadow banking sector is the “soft spot in the financial system” and could trigger the next financial crisis, the vice-president of the European Central Bank (ECB) has warned.

In the aftermath of the rescue of Credit Suisse last week, Luis de Guindos told the Business Post that he believed the European banking sector was “sound and resilient”, but the non-bank sector “could be a source of problems for the whole financial system”.

The non-bank ...