In September 2008, policy makers in the major financial center countries feared a collapse of the international financial system and an economic crisis unprecedented since the Great Depression of the early 1930s. Indeed, in the space of a couple of months, a problem that had developed in the subprime mortgage market of the US financial system was transformed into a global financial crisis. The size of this financial shock and the speed of its transmission were largely unanticipated by market analysts and policy makers. The economic and financial costs of this crisis in terms of lost output, unemployment, and the decline in personal wealth have been enormous. The crisis has also raised important questions about the stability of the international financial system and the actions that are needed to reinforce the collective governance of that system.
KeywordsGlobal Financial Crisis Emerge Market Economy Bretton Wood System International Financial System Capital Account Liberalization
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