Substantial vulnerabilities and downside risks persist in the global economy
Agustin Carstens, governor of Banco de Mexico, feels that the international financial community, as a whole, must enhance its capability to better respond to future crises. February 06, 2013 | Agustin CarstensLet me start by presenting my view on the world economy, focusing on the epicentre of the crisis – the advanced economies. The crisis erupted in full in late 2008, at the time of Lehman Brothers’ collapse. The virulence of the consequences of this event brought a sense of common purpose among the most important countries in the world. In countries like the G20 and the IMFC, a coordinated policy response was instrumented, having as main objectives to stabilise financial markets so as to restart the intermediation of financial resources across countries and regions, and to implement counter-cyclical fiscal and monetary policies to contain the contractionary forces in economic activity and employment. At the same time, the process of the dearly needed redesign of the international financial architecture was initiated. The signs in 2009 and 2010 were relatively encouraging. The forceful measures implemented in the US to backstop its financial markets and institutions were successful; it seemed at the time that the contagion to European financial institutions and economies was under control, and some advanced economies (like Singapore, Australia and Canada) and a broad number of emerging economies (like China, India and Mexico) were experiencing a very strong rebound in economic activity. As a matter of fact, towards the end of 2009, an incipient sense of achievement started to appear, as it can be exemplified by some of the remarks by former IMF managing director, Dominique Strauss-Kahn, made precisely here in Singapore in November 2009 as he delivered his Monetary Authority of Singapore Lecture. Let me quote, “While I am hopeful that the global economy has turned the corner, the recovery remains fragile. Policy makers should therefore keep supportive measures in place until a recovery is firmly established and conditions for unemployment to recede are in place. Regardless of the extent of economic recovery, it makes sense for policy makers in all countr... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Capital & Strategic Issues, Regulation, Risk and RegulationCapital & Strategic Issues,riskregulation,Risk and Regulation, Capital & Strategic Issues,Regulation,Risk and Regulation, Keywords:Agustin Carstens, Banco De Mexico, IMF, OMT, LTRO, Target 2, ECB, Fragmentation Risk, MAS, Market Risk Agustin Carstens, Banco de Mexico, IMF, OMT, LTRO, Target 2, ECB, Fragmentation Risk, MAS, Market Risk
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