The 2008 Global Financial Crisis was the worst economic crisis since the Great Depression and the world still suffers from systemic financial instability.Read More
What went wrong?
The efficient market hypothesis stipulated that bubbles could not exist and that the market is the best disciplining device.Read More
New Economy in Progress
A better financial system needs to counter herding, booms and busts and the inherent tendency towards instability.Read More
CHART: Financial crises in advanced economies, 1870-2015
Evidence shows that larger and more complete financial markets have not led to a reduction in the incidence of financial crises. On the contrary, systemic risk is back.
5 ways that are discussed to remake finance
- Macro-prudential regulation such as caps on loan-to-value or debt-to-income ratios to lower systemic risk.
- Higher bank capital ratios to reduce leverage levels and the risk of bank collapses.
- Countercyclical capital buffers to reduce the procyclicality of the financial system
- Financial transaction tax to reduce unnecessary or destabilising financial activity.
- A new version of the Bretton Woods System, which shaped the post-war era.