If it looks like a duck, quacks like a duck, and acts like a duck, then it is a duck. But what about an institution that looks like a bank and acts like a bank? Often it is not a bank, it is a shadow bank. It is truly surprising that the potentially negative implications of the rapid development of shadow banking have received so little attention. To add to the general unease, the Federal Reserve indicated last Friday that US banks have crossed the US$1 trillion threshold in outstanding loans to non-deposit-taking financial companies (NDFCs) at the end of January, as reported by the Financial Times. This broad-based sector operates completely outside the existing regulatory framework that governs traditional banks and includes money market funds, hedge funds, private equity and venture capital funds, and repo market participants amongst others. It constitutes a substantial source of systemic risk which could easily cause great damage to the functioning of the financial system. The rapid growth of leveraged lending, extended at significantly higher risk than traditional loans, is a matter of particular concern. Last year, the Federal Deposit Insurance Corporation proposed requiring banks to disclose more data on their exposure to different types of shadow banks. Nothing has yet been undertaken and even this step falls far short of actually regulating the risks involved or even conveying a clear idea what these risks comprise. The situation is worrying. We should all be monitoring these developments closely as they unfold, as they hold the potential to shape the future trajectory of financial regulation and market stability.