Shadow Banking Shrinks to Least Since 2000 as Liquidity Declines
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The financing markets that grease the wheels of most debt trading have contracted to the smallest in 15 years as liquidity declines, adding to concern U.S. economic stability is at risk.
The amount, known as shadow banking, was $4.13 trillion last month, down from a peak of $7.61 trillion in March 2008, according to data compiled by the Center for Financial Stability, a nonpartisan research group. The CFS measure, which includes money-market funds, repurchase agreements and commercial paper, all adjusted for the impact of inflation, is at the lowest since January 2000.