Recent economic indicators have suggested that the worst may now be over for the global economy. The outlook is still uncertain, but one thing that is clear is that change in our globalized economy, which is now inextricably linked with financial activities, will take place with growing rapidity. For that reason, a regulatory regime that […]
Japan’s banking crisis of the late 1990s and early 2000s offer critical lessons on how to deal with the current financial crisis. This column warns against relying on fiscal stimulus, stresses the importance of recapitalising viable bank but letting the ‘zombie banks’ go bust to boost certainty about financial firms’ solvency. In order to avoid a vicious cycle of steady economic decline as in Japan, the G8 and emerging economies should create a “Financial System Stabilisation Fund”.