This week, a senior banker friend gave me a poster that had been created by downloading a chart recently produced by economists at the New York Federal Reserve.* It was shocking stuff. Entitled The Shadow Banking System, the graphic depicts how money goes round the modern world, particularly (but not exclusively) in the US.

At the top lies a smart section labelled the "Traditional Banking System", in which a simple flow of boxes explains how investors' funds are deposited with traditional commercial banks, which then transform this into long and short-term loans, and equity.

So far, so comprehensible. But most of the poster is dominated by two sections called the "cash" and "synthetic" shadow banking systems, or those "financial intermediaries that conduct maturity, credit and liquid transformation without access to central bank liquidity or public sector credit guarantees", as the associated NY Fed working paper says. These flows are so extraordinarily complex that hundreds of boxes create a diagram comparable to the circuit board of a high-tech gadget. Even as poster size, it is difficult to decode.

David Fuller's view Here is the Shadow Banking report produced by the Federal Reserve Bank of New York. You will find the Road Map on page 2.

No wonder regulators have struggled to fully understand, let alone monitor shadow banking.