Blame Govts And Regulators For The Crash
June 12th, 2009
A new book with contributions from some of the world’s leading economists, challenges the myth the recent banking crisis was caused by insufficient statutory regulation of financial markets. The book “Verdict On The Crash,” finds statutory regulation failed, and market participants took more risks than they should have done, but statutory regulation made matters worse rather than better.
The fifteen experts who contributed to the International Economic Agency study, find Govt policies failed in other respects too. As with the boom and bust which led to the Great Depression, loose monetary policy on both sides of the Atlantic helped to promote an asset price bubble and credit boom which, at some stage, was bound to have serious consequences.
Rejecting the failed approach of discretionary detailed regulation of the financial system, the authors instead propose specific and incisive regulatory tools designed to target, particular weaknesses in a banking system backed by deposit insurance.
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