The financing markets that help ease most U.S. debt trading are showing signs of stabilizing after shrinking by almost 50 percent since the financial crisis.
The amount, known as shadow banking, was US$4.124 trillion in February and averaged $4.139 trillion over the past three months, according to data compiled by the Center for Financial Stability, a nonpartisan research group. The measure, which includes money-market funds, repurchase agreements, and commercial paper, all adjusted for inflation, peaked at $7.61 trillion in March 2008.
"The flicker of good news is that we are starting to see a bottom form and hopefully we will start to see a recovery," Lawrence Goodman, president of the New York-based the Center for Financial Stability. "The damage is done, and we still have a long ways to go for there to be re-engagement of market finance in the economy. The economy has been growing substantially below potential, in part because market finance has failed to provide the fuel to the economy."
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