THE CRISIS: POLICYLESSONS ANDPOLICYCHALLENGES
AGNÈS BÉNASSY-QUÉRÉ*, BENOÎT COEURÉ**,PIERRE JACQUET
AND JEAN PISANI-FERRY
•There are three different, non-mutually exclusive lines of explanation for the crisis: wrong incentives in the financialsector, unsustainable macroeconomic outcomes, andmisunderstood and mismanaged systemic complexity.These yield different sets of policy recommendations.•Steps have been taken to address several issues – overhaulof financial regulation, supervisory reform, changes in themonetary policy framework – but some crucial themes arestill to be addressed.•On the regulatory front, moral hazard, separation of retailand investment banking, the desirable size of the financialinstitutions, and the impact of new capital regulations onthe cost of capital have to be resolved.•On the macro-financial front, the crisis has shown thateconomic policy must encompass risk-management, andhas raised questions about the role of central banks infinancial stability. There is no agreement as to how muchcurrent-account imbalances contributed to financialinstability, and the history of peer-pressure-basedsurveillance does not bode well for the newly-created G-20framework for sustainable growth.Previously published as CEPII (
Centre d’études prospectives etd’informations internationales
) working document 2009-28.* CEPII, University Paris-Ouest and Ecole Polytechnique, Paris.** Ecole Polytechnique, Paris.† ENPC, Paris, and Agence Française de Développement.‡ Bruegel, Brussels, and University Paris-Dauphine.
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