Shadow banking is an important part of the financial system. Its emergence was stimulated by the development of technology, the circumvention of regulatory restrictions aimed at bank operations and the development of market financing. It brings advantages such as additional sources of financing, availability of financial resources to entities that do not have access to bank loans and reduction of reliance on the banking sector. During the world financial crisis, the risks for financial stability that shadow banking brings were recognized. Since then, its regulation has been developing. The entities, activities and regulation of shadow banking differ in the European Union and China. The goals of this research are to analyze shadow banking as a part of financial systems of the European Union and China and to compare the most important features of shadow banking and regulatory measures that have been introduced in these economies to date. The methods of induction, deduction, analysis, synthesis, compilation and comparison are used in this research. Shadow banking plays an important role in both economies. It is considered an important cause of economic growth in China, and an important source of financing in the European Union. The assets of this sector in China account for approximately 60% of GDP, and in the European Union approximately 108% of GDP. The biggest challenge in both economies is the development of the regulation of this sector, the aim of which is to strengthen resistance to shocks and increase the possibility of using the advantages brought by shadow banking. In China, the greatest advantage is economic growth that has been achieved, and in the European Union, the possibilities of using securitization in financing the development of the capital market and the green transition are being explored.