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Since the collapse of Lehman Brothers, the shadow banking system has drawn the attention of international institutions and academic community for its central role in the break-out of the global financial crisis. During the last decades, the shadow banking system considerably grew in size, especially in advanced economies, spreading across the real sector of the economy through its intertwined relationships with the traditional banking system, households and non-financial corporations. The aim of the present paper is to examine the evolution of the shadow banking universe and to provide some tools for the comprehension of a booming phenomenon, strongly blamed for representing one of the main causes of the recent global turmoil and for posing grave threats to financial and economic stability. Hence, following a deductive approach, the work concludes with some remarks on the risks connected to the shadow banking system as well as on the functions of monetary and fiscal authorities.

The new system of structural deficit parameters, introduced with the 2018 balance sheet, can be made more effective, integrating it with other indicators and introducing an alert system that prevents the degree of balance sheet deterioration, as shown empirically on the 10 main Italian cities.