The World in Crisis

Download PDF Forward

The financial crisis of 2007-09 cost taxpayers in the United States and Europe the equivalent of some 25 percent of world GDP in guarantees and subsidies to maintain financial stability. This has prompted a major rethinking by governments, financial regulators and central banks of how financial institutions and markets should be supervised and regulated, so that going forward the chances of a repetition of this sort of crisis are dramatically lower and the adverse consequences of such crises will be less severe.  Some changes (reforms) in regulation already have been adopted, while others are being considered but not yet fully thought through or implemented.  And, while some individual countries have adopted altered their regulatory regimes, the discussion over global coordination has not yet progressed very far. 

This on-line book brings together, in separate chapters, the thoughts and analyses of members of six  Shadow Financial Regulatory Committees, independent bodies of experts, from different countries or regions of the world (Asia, Europe, Japan, Latin America, Oceania, and the United States) on how the crisis evolved in each of their countries or region, on lessons learned from the crises and from reform measures adopted or not adopted in their own areas to date and to propose ways in which cross-country coordination of financial regulatory policies may help prevent future crises, or at least minimize their severity.

The book begins with an Executive Summary of the chapters, followed by a statement adopted by the six Shadow Committees at a joint meeting in Washington, D.C. on October 22 - 24, 2011 on the current economic and financial crisis in the Eurozone countries,applying relevant lessons from the individual chapters.

The financial crisis that began in 2007 and its aftermath will have ramifications for many years. We hope that financial policy makers and interested citizens from around the world will find the different yet very common perspectives from the individual Shadow Committees illuminating and informative, and ideally helpful in avoiding or at least reducing the impact of future financial crises. The chapters are presented in draft form more or less as they were discussed at the meeting, with some light editing, in the belief that timeliness of availability will be more beneficial to policy makers in analyzing and solving the ongoing Eurozone crisis than additional editorial refinement. The names and affiliations of the Shadow Committee members who attended the summit meeting are shown at the end of the book.

The U.S. Shadow Financial Regulatory Committee is funded by, but independent of, the American EnterpriseInstitute.  The Committee's administrative offices are at Loyola University Chicago. Professors George Kaufman and Richard Herring are co-chairs. They can be reached at gkaufma@luc.edu  and herring@wharton.upenn.edu  The Joint Committee meeting was funded by a generous grant from the Smith Richardson Foundation.