Posted on March 9, 2011 by iMFdirect
By Stijn Claessens and Ceyla Pazarbasioglu
(Version in Español)
Crises are like stories; they have a beginning, middle, and an end, and on occasion, we learn something along the way.
In times of crisis, choices must be made. In the most recent global economic crisis policymakers moved quickly to stabilize the system, providing massive financial support, which is the right response in the beginning of any crisis. But that only treated the symptoms of the global financial meltdown, and now a rare opportunity is being thrown away to tackle the underlying causes.
Without restructuring financial institutions’ balance sheets and their operations, as well as their assets ‒ loans to over-indebted households and enterprises ‒ the economic recovery will suffer, and the seeds will be sown for the next crisis. Continue reading
Filed under: Advanced Economies, Economic Crisis, Financial Crisis, Financial regulation, International Monetary Fund | Tagged: bank balance sheets, cross-border exposures, financial institutions, financial restructuring, financial sector, financial sector reform, financial sector regulation, financial system risk, global economic crisis, nonperforming loans, resolution mechanisms, restructure assets, stress tests, systemic risk | 8 Comments »
Posted on August 16, 2010 by iMFdirect
By Laura Kodres
Just as a tornado in Kansas transplanted Dorothy and, her dog, Toto, from familiar comforts to the unknown land of Oz, the global crisis has led many to wonder what has become of the global financial system and, more importantly, what will it look like next. Is the wicked witch of the West—excessive risk taking and leverage—really dead?
But now, as the storm subsides, there is time to speculate about what the future financial sector might look like. My IMF colleague, Aditya Narain, and I have done just that in a new Staff Position Note that attempts to discern the contours of this new financial landscape. What is clear is that the new landscape will be influenced by both the private and public sectors—their reactions to the crisis and to each other.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, Financial regulation, IMF, International Monetary Fund, Multilateral Cooperation | Tagged: banks, contagion, deleveraging, financial reform, Financial regulation, financial sector reform, financial sector supervision, financial supervision, financial system risk, global financial system, leverage, macrofinancial linkages, macroprudential regulation, nonbanks, regulatory perimeter, risk taking, systemic collapse, systemic risk | 5 Comments »