Get The Parallel Banking System

A parallel banking organization exists when at least one U.S. bank and one foreign financial institution are controlled either directly or indirectly by the same person or group of persons who are closely associated in their business dealings or otherwise acting together, but are not subject to consolidated supervision ...

Under the dual banking system in the United States, banks are afforded a choice in primary regulator and under which laws they will be chartered: state or federal. The coexistence of these two parallel systems allows for healthy market competition.

Although banks do many things, their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds. Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money).

The “dual banking system” refers to the parallel state and federal banking systems that co-exist in the United States. The federal system is based on a federal bank charter, powers defined under federal law, operation under federal standards, and oversight by a federal supervisor.

The dual banking system allows for the co-existence of two different regulatory structures for state and national banks. This translates into differences in how credit is regulated, including legal lending limits, as well as variations in rules from state to state.

The “dual banking system” refers to the parallel state and federal banking systems that co-exist in the United States. The federal system is based on a federal bank charter, powers defined under federal law, operation under federal standards, and oversight by a federal supervisor.

What Are Examples of Shadow Banks? Investment banks, like Goldman Sachs or Morgan Stanley. Mortgage lenders. Money market funds. Insurance/re-insurance companies.