Towards a theory of shadow money..

Those who think shadow money/banking is a new idea and came to the fore only in 2008 crisis, should know better.

Similar concerns arose when banks started offering deposits and one was not sure whether they should be counted as money or not. Over a period of time, deposits are not just counted as money but has become the most dominant form of money as well.  So will repos the new shadow banking instrument make the similar transition as well?

Daniela Gabor and Jakob Vestergaard of INET have a paper on the topic. A broad summary is here..

 

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