The phrase “shadow banking” has been developed in the aftermath of the financial crisis and has been widely used by the press to conjure up images of a murky, dangerous world capable of destroying unwary financial institutions and wreaking havoc on the wider financial system. This view has developed partly as a result of the impact that the failure of structured investment vehicles (“SIVs”) and asset-backed commercial paper programmes (“ABCPs”) had during the financial crisis.

At the meeting of the G20 leaders in Seoul in November 2010, the Financial Stability Board (“FSB”) was mandated, in collaboration with other international bodies, to develop recommendations to strengthen the oversight and regulation of the shadow banking system. On April 12, 2011, the FSB published a background note setting out the initial views of a taskforce established by it to seek to...