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In the five years since the Global Financial Crisis, no policies have been developed to effectively ensure against another systemic failure of banking and insurance systems.
It has now been five years since the beginnings of the Global Financial Crisis (GFC). What has been learned — if anything — by international agencies about the nature of the crisis and how to manage macroeconomic policy? In the wake of the crisis, ongoing problems of the Eurozone, slow and fragile growth in the United States and a slowdown of emerging economies, governments around the world have been reviewing the risks to insure economies against the systematic failure of banking and insurance systems.
The GFC drew attention to market volatility, to knock-on effects of “too big to fail” entities, the dangers of high levels of public debt and the risks associated with the massive growth and expansiveness of the finance sector vis-a-vis the real productive economy. Suddenly the role of the state and other extra-state agencies is back on the policy agenda as governments explore the scope of new regulatory tools designed to restructure banks, introduce new capital reserve levels and monitor professional standards. Greater thought has been given to the threats that the finance sector pose to the economy as a whole, and European governments in particular have sought to deal with these problems by pursuing austerity measures designed to cut levels of unsustainable public debt.
