should shadow banks be regulated 
many institutions including the european commission argue that they should they argue that the shadow banking sector requires regulation because of its size its close links to the regulated financial sector and the systemic risks that it poses there is also a need they claim to prevent the shadow banking system from being used for regulatory arbitrage or the process of taking advantage of loopholes to avoid potential regulatory restrictions 10the bottom linethe shadow banking system consists of lenders brokers and other credit intermediaries who fall outside the realm of traditional regulated banking although the term shadow banking sounds somewhat sinister many well known brokerages and investment firms engage in shadow banking activity proponents of these firms argue that they provide necessary credit that is not available through traditional banking channels opponents say that the shadow banking sector is an unregulated risk to consumers and to the financial security of the u s and global economy 