Like the coal miners of old, who used canaries as an early warning signal for toxic gases underground, policymakers would be well advised to take note of these blow-ups as early warning signals.”Within a space of about three months, there have been at least three serious financial blow-ups. Like fissures forming before an eruption, these blow-ups, though isolated, could be the early warning for policymakers and financial markets. Though Greensill Capital was supposedly a fintech concern, its supply chain financing (SCF) was nothing but good old factoring. Using technology and operating on thin margins, Greensill Capital was really a “shadow bank” with little regulatory oversight. Like the coal miners of old, who used canaries as early warning signals for toxic gases underground, policymakers would be well advised to take note of these blow-ups as early warning signals.

Source: The Edge Markets April 28, 2021 06:11 UTC