M-RCBG Associate Working Paper No. 40

The Unfinished Work of Reform in the Global Financial System

Lewis B. Kaden

May 2015


In the summer of 2007, early signs of distress in the United States housing market signaled the beginning of what Ben Bernanke, then the Chairman of the Federal Reserve Board, would later describe as “the worst financial crisis in global history, including the Great Depression.” Today, almost eight years later, much of the world is still wrestling with the effects of what proved to be “the deepest post World War II recession by far.”

Among many other things, the financial crisis spawned a vigorous public dialogue on the steps that should be taken to prevent any comparable calamity in the future and led to the enactment of a mass of new regulation of financial institutions. Beginning in 2009, as the global financial system emerged from the crisis and began a slow and uneven process of recovery, extensive reforms to the system were set in motion by measures adopted in the U.S., Europe, and, through the G-20, in other significant financial centers around the world. Though there is broad agreement that much remains to be done to implement these reforms, many wise and well-informed participants in global finance now believe that the critical strategic work of reform has been substantially accomplished. This view is exemplified by recent comments by Mark Carney, the highly respected Governor of the Bank of England and Chairman of the Financial Stability Board, who characterized the G-20 meeting in Brisbane, Australia in November 2014 as a “landmark,” and expressed the view that the “prudential requirement and supervisory framework for banking are largely settled...[I]t is now a question of implementation...[of] the agreed reform [that will make] the system safer...simpler...[and] fairer."

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