Where has all the Money Gone?

Abstract

This paper explains how modern developments in lending and liquidity management using short‐term secured lending contributed to the process of financial sector expansion prior to the financial crisis and its subsequent unwinding. It focuses upon the role of the non‐regulated financial sector, and aims to assist readers to understand the answer to the commonly asked question: where has all the money gone? It draws some lessons and policy implications and identifies a number of regulatory issues emerging as the subject for debate.