BIS reviews crisis and the policies

BIS reviews the crisis and the policy responses in its Annual Report 2008-09. As always, it is a lucid read with graphs and charts.

The failures that caused the crisis were broad-based. They included macroeconomic factors, such as large and persistent global current account imbalances and low real interest rates over a protracted period. And they also included microeconomic factors, such as flawed systems for measuring and managing risk, misaligned incentives and inadequate corporate governance at financial institutions. The result was a build-up of excessive leverage in the financial sector and in the household sector in a number of countries. Neither market discipline nor regulation and supervision were able to prevent these developments.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: