Professor Patrick Honohan:

The whole area of shadow banking, shadow financial institutions and unregulated entities is something we have been looking at for some time. While one could have the ambition to regulate everything, one will not actually achieve it. Therefore it is quite a good idea to draw a line where one thinks one can regulate, if people who are outside that line are not exposing the system or individual depositors to risk. As for firms that are collecting money from wholesale sources and lending it on, this is an area in which we actually have promulgated a proposed set of regulations for these firms or funds that initiate bank loans. These are tough regulations we have proposed to introduce and we had a discussion paper about it earlier this year. That is very much in that territory but we move cautiously, because we do not wish to give the seal of approval to firms about which we have no way of discovering what they are doing. It is a tricky area.