The “shadow-banking sector” played a key role in the onset of the financial crisis of 2008 and dwarfs traditional banking both in size and perceived systemic risk, but political economists still know comparatively little about it. A number of recent developments highlight its ongoing importance in Europe. First, European shadow-banking has been growing rapidly since the crisis, to its current size of $22 trillion, just shy of its US counterpart. Second, in Europe, unlike the US, the evolution of the shadow-banking sector is closely related to the structural reforms of European banks. Regulatory constraints and the ECB’s recent market-based initiatives may push banks into shadow banking activities. Finally, under the Banking Union plans, the ECB will directly supervise large credit institutions with extensive connections to the shadow-banking universe, both in Europe and the United States. Yet crucially, the ECB dropped initial plans to include systemic shadow banking actors on its list of significant banks. 

All of this raises a number of crucial questions: What explains the post-crisis resilience of European shadow-banking? How can we best understand the co-evolution of shadow banking, regulation and unconventional monetary policy? What is the distinction between shadow-banking and market-based finance, and how does the politics of this distinction play into the Banking Union and Capital Markets Union plans? How do the European Banking Union plans engage with systemic risks that originate in the shadow-banking sector? How do we continue to “construct” the collateral on which the shadow-banking sector rests as safe after the crisis?