11/4/2010

The International Monetary Fund said some banks might be prompted to move to areas more lightly regulated because meeting liquidity requirements will be difficult. "Some activities may move toward the less-regulated shadow-banking sector, as the regulator costs to banks to undertake such activities" increase, according to an IMF report. "However there is the possibility that the risk to the banking system would remain given the interconnectedness of banks with nonbank entities."

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