As banking regulations have tightened, a significant volume of credit creation has moved outside the traditional regulated banking sector into the Shadow Banking Sector, also known as Non-Bank Financial Intermediation (NBFI).

The shadow banking perimeter includes money market funds, hedge funds, and special purpose investment vehicles that engage in maturity transformation without direct access to central bank emergency liquidity facilities:

[Corporate Customer] <--- Places Cash Reserves ---> [Money Market Fund Pool] ---> Purchases Commercial Paper ---> [Funds Corporate Asset]

Because these entities lack central bank liquidity backstops, they are highly vulnerable to sudden investor runs during periods of market stress. This vulnerability requires macroprudential authorities to expand their oversight and monitor non-bank networks to prevent shadow banking failures from spilling over into the primary banking system.