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    Lessons From The Global Financial Crisis: Date 9 August 2012

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    Pankaj Khanna
    The global financial crisis taught valuable lessons about the interconnectedness of financial institutions and how quickly financial stress can spread internationally and cause recessions. While New Zealand and Australia avoided the worst effects, extraordinary policy actions were still needed. Issues remain like household debt, and unconventional monetary policies in other nations are causing spillover effects on capital flows and exchange rates for small open economies like New Zealand. Regulators must continue working to strengthen financial systems while also preparing practical responses in case future crises occur.

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    Lessons From The Global Financial Crisis: Date 9 August 2012

    Uploaded by

    Pankaj Khanna
    22 views1 page
    The global financial crisis taught valuable lessons about the interconnectedness of financial institutions and how quickly financial stress can spread internationally and cause recessions. While New Zealand and Australia avoided the worst effects, extraordinary policy actions were still needed. Issues remain like household debt, and unconventional monetary policies in other nations are causing spillover effects on capital flows and exchange rates for small open economies like New Zealand. Regulators must continue working to strengthen financial systems while also preparing practical responses in case future crises occur.

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    Corporate Governance

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    The global financial crisis taught valuable lessons about the interconnectedness of financial institutions and how quickly financial stress can spread internationally and cause recessions. While New Zealand and Australia avoided the worst effects, extraordinary policy actions were still needed. Issues remain like household debt, and unconventional monetary policies in other nations are causing spillover effects on capital flows and exchange rates for small open economies like New Zealand. Regulators must continue working to strengthen financial systems while also preparing practical responses in case future crises occur.

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    Download as docx, pdf, or txt
    22 views1 page

    Lessons From The Global Financial Crisis: Date 9 August 2012

    Uploaded by

    Pankaj Khanna
    The global financial crisis taught valuable lessons about the interconnectedness of financial institutions and how quickly financial stress can spread internationally and cause recessions. While New Zealand and Australia avoided the worst effects, extraordinary policy actions were still needed. Issues remain like household debt, and unconventional monetary policies in other nations are causing spillover effects on capital flows and exchange rates for small open economies like New Zealand. Regulators must continue working to strengthen financial systems while also preparing practical responses in case future crises occur.

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    Lessons from the global financial crisis

    Date 9 August 2012

    New Zealand and Australia continue to learn valuable lessons from the global financial crisis,
    despite escaping the turmoil relatively lightly, Reserve Bank Governor Alan Bollard said today.

    Delivering the Sir Leslie Melville Lecture at the Australian National University in Canberra, Dr
    Bollard said the crisis challenged many countries on a number of fronts. The experience of major
    financial system convulsions, followed by global recession and the emergence of the euro area
    sovereign debt crisis, provoked economic researchers and forecasters to reassess what is known
    and where research should focus.

    One lesson from the crisis was the interconnectedness of financial institutions - both
    domestically and globally.

    Lessons were also learnt about how quickly systemic financial stress in major countries could
    spread and create strong recessionary conditions around the world.

    Dr Bollard said the crisis also challenged financial regulators and monetary and fiscal policy
    makers, who are still working to “understand, contain and repair the damage to financial
    systems, to economies and to governments’ financial capacity.”

    Fortunately, New Zealand and Australia escaped the worst of the financial crisis. However,
    extraordinary policy action by central banks and governments was needed at various times, he
    said.

    Legacy issues remain to be dealt with, such as still-elevated levels of household debt. Small open
    economies are also experiencing spillovers into capital flows and exchange rate pressures from
    unconventional monetary policy actions by major central banks, and this is problematic for New
    Zealand.

    Dr Bollard said it is unrealistic to try to reduce the risk of a systemic crisis to zero.

    “Part of the strengthening of the financial system overall must therefore include practical
    preparation for further crises, as well as regulation and supervision with an eye to ensuring that a
    crisis can be dealt with effectively should it eventuate.”

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