A Retreat From Global Banking

Globalization seems to be receding in the world of banking not because the banks themselves have turned inward, but because governments are now more local in focus. Moreover, the desire or need to find a scapegoat for the crisis has also chipped away at globalization’s edifice: the Federal Reserve and the Treasury in the US have had to defend in Congress their actions during, rather than their policies before, the crisis, for instance. But more importantly, many countries are discussing regulations to erect barriers to capital flows. Such rumblings – whether or not they presage a tectonic shift – have led a group of the world’s largest financial institutions to appeal for more international cooperation in financial regulation and to recognize that local solutions may add up to a morass of reform that could hamstring the global recovery. In the end, what seems to be missing from the debate is how to keep the benefits accrued from 30 years of financial globalization while mitigating the risks of interconnectedness – using globalization to help the world economy grow out of this recession, while protecting it against another crisis. – YaleGlobal