One of our favorite thinkers on Shadow Banking, Zoltan Pozsar, has released a new paper on the role of Shadow Banking in financial markets. His previous work focused on the microstructure and mapping of Shadow Banking – who does what and how they do it. This latest piece makes the case that Shadow Banking plays an important part in leveraged bond portfolios, which in turn could create new policy arguments for increasing market liquidity without increasing balance sheet utilization. We review his draft paper published on January 31, 2015.
