18 Dec 2013, 1:57 pm
Mark Carney, who is also chair of international watchdog the Financial Stability Board (FSB), was speaking at an industry event in Paris. Although he did not name any specific financial markets the Daily Telegraph, which carried his comments, noted the recent growth in "off-books banking" in China.
"The last financial crisis in the advanced countries is finished," Carney said. "The greatest risk is the parallel banking sector in the big developing countries. That is why it is necessary to push through reforms not only in the advanced countries, but also in the emerging countries at the same time."
The FSB published a final set of recommendations for the regulation of so-called shadow banking in September, which will be delivered to the G20 group of leading global economies for action and potential adoption.
The term 'shadow banking' generally refers to the provision of credit either fully or partially outside of the regular banking system. Activity in the sector has tripled over the past decade and covered assets worth $67 trillion by the end of 2011, according to FSB estimates. Shadow banking activities are typically subject to less stringent, if any, oversight than traditional banking activities. However, they can also run into financial difficulties, as was the case with money market funds during the economic crisis of 2007-09.