Financial Crisis

Financial Crisis
Reformatting global system
Supachai Panitchpakdi
These are some of the regulatory "quick fixes", on which there is already broad agreement. But they amount to little more than band-aids applied to the gaping holes created or at least exposed by the crisis, and such band-aid solutions are clearly inadequate to prevent the next crisis. And in the wake of a crisis of this magnitude, we can no longer say that the financial system basically works, as long as we apply some regulatory tweaking. We may need to rethink the entire global financial architecture - literally, from its foundations to its roof - to prevent financial turbulence from wreaking such havoc on the world in future. Indeed, President Bush recently invited the G20 to a summit on November 15 to discuss the crisis, and some have argued that this meeting should consider reforming that global architecture. What, then, are some of the principles and policy ideas that could guide such a reform?