In the aftermath of the crisis, there seems to be a consensus that even if the real economy fully recovers, deepening of financial globalization will not return to the dynamic it had prior to 2007. Some academics predict that global financial intermediation will slow down naturally as the system continues to fix the excesses of the recent past. Others prescribe that policy should be such as to insure such slowing down. In fact, with the ongoing wave of financial reforms, we may be witnessing the first deliberate policy effort — albeit rather insufficiently coordinated internationally — to at least moderate one of the facets of contemporary globalization, the financial one.
At the 2014 Meetings of the American Economic Association in Philadelphia, Ernesto Zedillo chaired a session to explore retrospective and prospective views of financial globalization. He was joined by Andrew Haldane, Chief Economist, Bank of England; Hans-Werner Sinn, President, Ifo Institute for Economic Research; Simon Johnson, MIT Sloan Professor of Entrepreneurship; and Maurice Obstfeld, Professor of Economics, UC Berkeley, and Member of White House Council of Economic Advisers.
The world has largely failed to learn from globalization’s most obvious and far-reaching consequence yet: the 2008 financial crisis. While it is impossible to safeguard the system fully, sound regulation and effective oversight could have prevented the crisis, or at least reduced its impact on millions of people’s livelihoods.