“Shadow banking” must be dragged into the harsh light of day and both it and global banks must be forced to serve the real economy, one of the world’s top regulators has warned.

Market-based sources of credit, such as corporate bond sales and direct lending by hedge funds – are now half the size of the traditional banking sector and are growing as many banks scale back their lending.

Mark Carney was appointed to chair the Financial Stability Board in November and given a number of tasks by the leaders of the Group of 20 large economies. The aim was to prevent a repeat of the 2008 financial crisis. At the top of his agenda are making global banks safer, and expanding the regulatory net to include shadow participants, such as investment funds and special vehicles that compete with banks to extend credit.