The global credit crisis of 2008: causes and consequences

Abstract

This article discusses the current global financial crisis and its implications for international finance and financial regulation. The article begins with a discussion of the causes of the crisis, particularly the role of regulatory incentives underlying excessive international and domestic borrowing, lending, and investment. From this basis, the article looks to the international responses to the crisis, focusing on the Financial Stability Forum and the Group of Twenty. In this context, it considers issues relating to systemic risk and financial stability, with particular attention to possible regulatory changes and their implications for international finance.