A Banker’s Perspective on the Financial Crisis

2009

During the last several years Robert Amzallag as Senior Fellow at CIRANO has taken an active interest in the research and transfer activities undertaken by the Finance Group. He has suggested initiatives that would be of topical interest to the financial industry in Montreal, particularly in derivative products and concerning practical issues in governance at the director's level. Before moving to London, he had met on a regular basis with the researchers at CIRANO. Of course, we have been eager during his career here in Montreal to listen to someone with his considerable experience in the banking sector, notably as the former President and CEO at BNP Paribas (Canada).Mr. Amzallag is certainly well placed to offer insightful commentary on the financial crisis that has preoccupied us over the last several months, and we have taken advantage of his annual stay at his country home north of Montreal to suggest that early in the New Year he present his thoughts on the crisis.... Au ...

Australian Journal of Corporate Law, 2010

2010

2014

Changes in the financial market and attempts at implementation of prudential regulation proposals after the recent financial crisis resulted in the scientific conference entitled International Conference on Management, Banking and Finance, held at the Faculty of Management, University of Warsaw, in June 2014. This monograph, the result of discussions and presentations delivered by participants, aims to present topics in the field of finance.

2009

The financial turmoil that originated in 2007 and developed into an unprecedented crisis battering financial and real markets is the latest manifestation, on a grand scale and with new attributes, of a welldefined pathology in the process of market liberalization and integration in the post-Bretton Woods era. At the root of the crisis lies a fundamental inconsistency between financial globalisation

2015

The financial crisis of 2008 bears lessons for regulators and academics on the causes of financial collapse, crisis contagion and the regulation of risk. The 2008 crisis was generated in the banking sector, and permitted by lax regulation on how banks lend money. This article outlines the reasons for the crisis, the means of financial contagion from the United States to the rest of the developed world, the response by global institutions and develops an argument in favour of using the institutions of global governance to re-regulate the financial services sector, significantly restricting the use of financial instruments that encouraged the crisis. The main thesis of this paper is that the financial crisis (1) exposed gaps in the regulation of financial services, (2) exposed limits in efficacy and serious side-effects of relying on central bank LLR functions as a counter-steering mechanism, (3) exposed the incapability of national regulators to fully prevent cross-border contagion a...

The Financial Crisis, 2011

2 The term "financial governance" often refers to shareholders' guidance of financial firms. Here this term refers to the public governance of financial institutions and markets. their own explanations for core questions about the economy: Why do banks exist? Is regulation needed? Does active fiscal policy raise welfare? Each school developed its own answers; the more influential and well-funded the school of thought, the more settled the views. So while differences of view about core economic questions have persisted over time, in the past three decades, most economists called to positions of economic-policy leadership have portrayed their own views as reflective of a sensible consensus. This suggested that economists' views vary within a narrow band, from slightly-critical-of-unregulated-markets to suspicious-of-governmentregulation. Regarding financial regulation, economists have routinely celebrated the importance of free markets and of reducing burdensome regulation. The financial-system flaws most frequently mentioned were the moral-hazard traps that arise due to bad regulatory design, about which promarket and pro-mild-regulation could readily agree. An example here is the 'consensus view' orchestrated among macroeconomists, whether they subscribed to the new Keynesian or new Classical schools of thought. Maintaining this consensus required that debate be polite: limited to empirical questions and to queries about equilibrium models with pre-agreed analytical features. Economists were certainly free to challenge the premises of this new-Classical/new-Keynesian consensus in favour of alternative ideas derived from overlooked thinkers such as Minsky and Keynes. But to challenge basic premises was to disagree impolitely; and such challenges could only be freely exercised outside the inner circles of policy influence. Nonetheless, as structural cracks and tensions began to emerge in the economy, several leading academics and policy veterans expressed their unease. John Geanakoplos of Yale, drawing on his Wall Street experience, began writing papers about 'broken promises' (1996) and 'leverage cycles' (2003) in financial markets-topics which had gone virtually unmentioned since the efficient market hypothesis became a super-orthodoxy in the 1970s. 3 In April 2005, Paul Volcker wrote an op-ed piece in the Washington Post, "Economy on thin ice," which foresaw the demise of Wall Street. Raghuram Raj, formerly head of research at the IMF, hypothesized that liberalizing financial markets could increase risk-taking and fragility, not welfare. Paul Krugman, in his public dialogue space at the New York Times, drifted steadily to the left. Then, after innumerable crises in the global South, a mega-crisis hit the global North. And the truce among economists proved fragile. Suddenly the rules of discourse wavered. The consensus that certain things were not to be spoken of was forgotten. Some economists continued to work from 'first principles', urging caution in responses to the crisis. Others set aside theoretical niceties and jumped toward pragmatic responses based on looking hard at the numbers.

The paper studies the causes of the current financial crisis and the policy responses by central banks and regulators. It also considers proposals for the prevention or mitigation of future crises.

2011