Shadow banks are a challenge for the Fed

Unlike traditional banks, shadow banks operate outside the regular regulatory framework, which can lead to increased financial instability and complicate the Federal Reserve's efforts to stabilise the US economy. With the growth of these non-bank financial institutions, the Fed faces a trickier path in managing interest rates and ensuring financial stability. This evolving scenario requires a nuanced approach to both monetary policy and regulatory oversight. This analysis explores these complexities and their implications.