Global financial reform since 2008: Achievements and shortcomings

Dejan Soskic

doi:10.2298/pan1503385s

Abstract

The global financial crisis that started in the U.S. had an immediate spillover to the rest of the world financial markets. Next, a decrease in real economic output throughout the developed world occurred simultaneously with high bailout costs for the salvaging of banks and other financial institutions. This vicious combination was at the core of the bank-sovereign interdependence and the sovereign debt crisis of the eurozone. As early as 2008, the G20 announced a thorough global reform agenda with an aim to tackle the root causes of the crises and to transform the system of global financial regulation. Some important reform steps have been made; still, more than six years on, the job is not finished. Where are we in terms of global financial reform, and are we close to creating a more secure global financial system significantly less prone to crisis and bailouts with taxpayers? money?

Highlights

The G20 initiative to reform the global financial system has practically been conducted without the formation of any new institutions
The Financial Stability Forum has evolved into the Financial Stability Board, but other than that, no major international institution has been created
This brings us to the source of the obvious weakness in the G20 global financial reform

Summary

Comprised of major world economies

Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union (represented by the European Commission and by the European Central Bank)

Literature Overview

Problem Set 1

Problem Set 2

Problem Set 3