Globalizing the Crisis Response

Regulation of finance has long been a responsibility for nations, but with the current global crisis, governments quickly learned they cannot escape a global credit freeze. Banks struggle to survive, some nations are already in recession and developing countries can anticipate reduced exports and problems ahead. The global nature of the crisis calls out for a global response, argue C. Fred Bergsten and Arvind Subramanian of the Peterson Institute for International Economics in an opinion essay for the Washington Post. The two recommend global stimulus, with nations relying on fiscal expansion or eased monetary policy, or both, as needed; coordinated efforts to recapitalize struggling banks, allowing no gaps in protection; and expanded deposit-insurance coverage. “Global oversight of both financial regulation and currencies can no longer be neglected,” caution Bergsten and Subramanian. Widespread cooperation from developed and emerging nations alike, could minimize the global pain. – YaleGlobal