Traders work on the floor of the New York Stock Exchange after the closing bell on Sept. At the time, the Dow recorded its biggest closing drop in history, falling 777 points.(Spencer Platt/Getty Images) The world in 2019 is still reckoning with the legacy of the global financial crisis, which is hardly surprising given its scale and lasting impact.In the United States, the Federal Reserve may need to raise interest rates higher than currently anticipated if tax cuts combined with fiscal stimulus fuel faster-than-expected inflation. First, they must complete financial regulatory reforms and, just as important, resist pressure to roll them back.
Regulation and supervision have been strengthened; many countries have stepped up their focus on monitoring financial stability, and many now also conduct regular stress tests to check banks’ health.
A substantial portion of trading in over-the-counter derivatives has shifted to safer central clearing systems.
For its part, the International Monetary Fund (IMF) has improved its ability to analyze and monitor sources of systemic risk.
It has partnered with national authorities to help them identify potential trouble spots, such as excessive consumer or corporate debt; develop tools to curb risks; and strengthen analysis of their financial systems.
“Too big to fail” remains a problem as banks grow larger and more complex.
More progress is needed on procedures for resolving, or winding down, failing banks, especially those that are active across borders.
Ten years on from the Lehman Brothers collapse, one question about the financial system keeps coming up: Are we safer than we were in 2008? While there has been marked progress, more needs to be done, including keeping pace with potential new risks from a rapidly evolving financial landscape. Banks have bigger and better capital buffers and more liquidity.
Countries have taken steps to address systemic risks posed by institutions seen as too big to fail.
Many of the measures that might make the world safer than it was before the last crisis depend on international cooperation—on matters of trade and finance but also on a number of global public-good problems, including the environment and refugees.
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