The rise of the shadow bank – a kind of credit intermediary that lies outside the range of much banking regulation – carries a subtler corollary. It has created a kind of money that is likewise beyond reach of central bankers’ traditional instruments of oversight and control. Rightly, the US Federal Reserve is responding by forging new tools.

Money created by governments comes in two forms. There is currency, the notes and coin you carry in your wallet; and there are reserves, balances held at the central bank by deposit-taking institutions. These liabilities always trade at par; a retail bank can reduce its reserves by $1m in return for receiving the same value in notes and coin from the central bank, just as you can exchange a dollar bill for four quarters.

But money also comes in private forms. Deposits in retail banks are one example. Balances in money market funds are another. (These institutions are similar to banks, except that they raise funds in the money markets instead of taking it from private depositors; and they use the proceeds to buy bonds instead of extending loans.) This “private” money usually trades at par, too. You can exchange $20 in bank deposits for a $20 bill as quickly as you can reach a cash machine.