Central Banks Are Flying Blind on Hedge Fund Leverage; shadow banks

 



The risks of shadow banks trading in the government bond market are mounting.

Global central bankers have ducked a chance to push for tight borrowing constraints on the biggest hedge funds, whose importance to core government bond and other financial markets has grown enormously in the past decade.

Such funds are at the center of so-called shadow banking, where the use of borrowed money and derivatives is a troubling source of instability that can hurt not only sophisticated investors, but also the pricing and supply of funding to all areas of the economy.

The Financial Stability Board, which meets in Basel, Switzerland, has been examining the scale and effects of borrowed money across non-bank, market-based finance since several small and large crises between 2020 and 2022 highlighted its power to cause damage. 

Paul J. Davies Bloomberg 10 July 2025

https://www.bloomberg.com/opinion/articles/2025-07-10/central-banks-are-still-flying-blind-on-hedge-fund-leverage


Tip of Debt Iceberg

https://englundmacro.blogspot.com/2023/05/tip-of-debt-iceberg.html


We no longer have business cycles; we have credit cycles

https://englundmacro.blogspot.com/2024/09/we-no-longer-have-business-cycles-we.html 






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