Wednesday, February 4

Toward a New Financial Architecture: Beyond Blowing Bubbles

The recent global financial and economic crisis has revealed a number of global imbalances, such as a lack of savings in the developed world while emerging markets have become major global savors. A long period of low interest rates and rising budget deficits in the US and some other countries has helped to artificially inflate domestic demand and discouraged savings while at the same time producing super asset bubbles, as well as bubbles on commodity markets. The crisis has revealed not only limitations in the current regime of global coordination and regulation, but all the drawbacks of a loose macroeconomic policy that sent the wrong signals to investors worldwide, encouraging them to take excessive risks.

The current dilemma is whether to further strengthen regulations or to rethink what sort of coordination is needed with respect to macroeconomic policies. Can the same authorities whose populist macroeconomic policies produce bubbles regulate the economy properly? Or should establishing a better macroeconomic environment become a priority? What will the global financial architecture look like a few years from now?

Sergey Guriev, Rector and Morgan Stanley Professor of Economics, New Economic School (NES)


Erik Berglof, Chief Economist, EBRD
Richard Clarida, Global Strategic Advisor, PIMCO
Hernando de Soto, President, Institute for Liberty and Democracy
Joel Kurtzman, Chairman of the Board of Directors, Kurtzman Group
Raghuram Rajan, Professor of Finance, University of Chicago Booth School of Business
Nouriel Roubini, Professor of Economics, NYU’s Stern School of Business, Chairman, RGE Monitor