associated with work. our responsibility, at the federal reserve and in congress, is to create the conditions most likely to preserve and extend the expansion. should the economic expansion continue into february of next year, it will have become the longest in america ’ s economic annals. someday, of course, the expansion will end ; human nature has exhibited a tendency to excess through the generations with the inevitable economic hangover. there is nothing in our economic data series to suggest that this propensity has changed. it is the job of economic policymakers to mitigate the fallout when it occurs, and, hopefully, ease the transition to the next expansion.

the euro area never attained the level observed in the u. s., notwithstanding the large drop in us issuance after the financial crisis. on the funding side, a main component of shadow banking is the secured lending markets, particularly the repo market. in the u. s., the money market funds are usually included in the shadow banking sector and were an important source of funding for other shadow financial institutions, like securitisation vehicles, via the purchases of their short - term debt. they are much less important in the euro area. however, in this respect, the relevance of their intermediation activity varies across countries and they are more closely tied to banks, therefore providing a powerful link between the shadow and the regulated banking sector. as policy makers, we are interested in the possible dangers for financial stability arising from shadow banking activities. in particular, we are concerned about the implications of these bis central bankers ’ speeches activities for global liquidity. if shadow banks are involved in a large share of the activities of the financial sector, it is more likely that in periods of stress liquidity dries up very quickly in certain markets leading to sudden stops in funding. also, shadow banking extends the intermediation chain and increases the associated contagion risks. there are various forms of interplay between the regulated banking system and the shadow banking system resulting in a substantial amplification of systemic risk. one of the elements for the us market, has been the “ run on repos ” of shadow banking entities that were funded using asset - backed - securities as collateral. when the value of these assets declined dramatically, these entities, which could not access central bank liquidity, got quickly into trouble. 1 “ bank runs ” involving shadow banking entities have systemic risk implications since they can quickly spill over to the regulated financial sector. this happens via contagion propagating through market dynamics – liquidity squeeze, fire sales – or via the interconnectedness with the regulated banking sector. shadow banking activities exacerbate the build - up of leverage and asset price bubbles and therefore amplify the procyclicality of the financial system. based on these characterisation and the available data, recent estimates published recently by the ecb2 put the value of the assets of shadow banking in the euro area to about one half of the assets of the banking system. in the u. s., in view of the lower weight of banks in the overall financial system, the size of