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September 5, 2012

Financial regulators should turn their attention to the potential threats to financial stability lurking in the shadow banking system, according to a report released today by the C.D. Howe Institute. In “Combatting the Dangers Lurking in the Shadows: The Macroprudential Regulation of Shadow Banking,” David Longworth, former deputy governor of the Bank of Canada, argues greater regulation of the financial entities in the sector is required to mitigate the risks of another run on the shadow banking system exacerbating financial instability, as occurred in the 2008/2009 financial crisis.

 

David Longworth
David Longworth

David Longworth is a Term Adjunct Professor at the Department of Economics at Queen’s University. Since 2010, he has also been an Adjunct Research Professor at Carleton University. Before that, he had a 36-year career at the Bank of Canada. From April 2003 until March 2010, he was a Deputy Governor there—one of two responsible for issues related to financial stability and financial markets.