The Financial Stability Board has this morning released its latest recommendations for stronger oversight and regulation of shadow banking. But it has also confirmed Australia's system has only a small shadow banking component and suggests Australia is at little risk from shadow banking.The FSB is the global body that monitors the global financial system and recommends rule changes. "Shadow banking" refers to financial institutions other than banks, insurance companies, pension funds and public sector finance groups, which frequently exist outside normal financial regulation but like banks can be vulnerable to "runs".The FSB's new recommendations to police shadow banking include gathering more data on the sector, and new rules to address shadow bank securities lending and repo activity.The report says Australia is in a group of major economies where shadow banking is less than 20 per cent of the financial system. Australia's shadow banking sector has also shrunk substantially between 2005 and 2011.Shadow banking is above 20 per cent in the US, the UK and the Netherlands, and has grown since 2005 in all these countries.The report also notes that Australia is among countries with a framework that addresses shadow banking issues. The Reserve Bank of Australia "conducts an annual monitoring exercise of shadow banking entities, including finance companies, and would highlight any risks to the Council of Financial Regulators for policy action by Council agencies," it says.The global shadow banking industry now holds $US67 trillion of assets, the FSB estimates.