Shadow banking is a risky business, for sure. That’s the reason why the Financial Times ran a recent series on shadow banking, with the first article investigating China. In China, shadow banking is a broad concern, given liquidity mismatches in the system, opaque asset quality and the fact that the end-users of such finance are often in the riskier sectors of the economy such as real estate and those struggling with over-capacity.

What’s worse, it has exposed traditional banks to increased wholesale funding and greater fragility. Therefore, Chinese banking regulators, in common with their global counterparts, are concerned about and eager to learn how the shadow banking sector is evolving and reshaping finance in China and around the world.

The FT shadow banking series provides timely assistance. For regulators, a better understanding lays the foundation for effective solutions, particularly in China where the swift disintermediation of commercial banks is under way. As a bank regulator in Shanghai, China, what surprises me, however, is that the China story leads the FT series on global shadow banking, and China’s shadow bank is labeled “global threat”.