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The Global Financial Stability Architecture Fails Again: sub‐prime crisis lessons for policymakers
Author(s) -
Pattanaik Sitikantha
Publication year - 2009
Publication title -
asian‐pacific economic literature
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.232
H-Index - 21
eISSN - 1467-8411
pISSN - 0818-9935
DOI - 10.1111/j.1467-8411.2009.01221.x
Subject(s) - financial crisis , credibility , crisis management , architecture , order (exchange) , financial stability , market liquidity , financial system , systemic risk , stress (linguistics) , business , economics , finance , political science , management , macroeconomics , art , linguistics , philosophy , law , visual arts
Every financial crisis leaves behind important lessons, while exposing the limitations of the policy framework for preventing a systemic crisis. The sub‐prime crisis has seriously dented the credibility of every institution vested with the responsibility for promoting financial stability. Besides the immediate global policy accent on crisis management in the form of unprecedented bailouts and massive liquidity injections, considerable analysis and policy emphasis has been directed at understanding the crisis in order to identify why and where the international financial stability architecture failed, and how it could be restructured to make it more effective in preventing another major financial crisis in future. The paper outlines the causes of the crisis, highlights the important policy issues that the global policy making community has to address, and discusses several suggestions for improving the global financial stability architecture.