From Crisis to Crisis

The global financial system has proven increasingly unstable and crisis-prone since the early 1980s. The system has failed to serve either creditors or debtors well. This has been reinforced by the global financial crisis of 2008, where we have seen systemic weaknesses bring rich countries to the brink of bankruptcy and visit appalling suffering on the poorest citizens of poor countries. Yet the regulatory responses to this crisis have involved little thinking from outside the box in which the crisis was delivered to the world.

This book presents a powerful indictment of this regulatory failure and calls for greatly increased attention to international financial law and analyses new regulatory measures with the potential to make a new recognition of the principles that ought to underlie it.

Using a historical approach that compares the various financial crises of the past three decades, the authors clearly show how misconceived economic policy responses have paved the way for each next ‘crash’. Among the numerous topics that arise in the course of this revealing analysis are the following:

• - overvalued exchange rates;
• - excess liquidity in rich countries;
• - premature liberalisation of local financial markets;
• - capital controls;
• - derivatives markets;
• - accounting standards;
• - credit ratings and the conflicts in the role of credit rating agencies;
• - investor protection arrangements;
• - insurance companies; and
• - payment, clearing and settlement activities.