The latest Bank of England KnowledgeBank discusses the impact of regulation since 2007. They discuss, capital, shadow banking and banker remuneration.
The financial crisis that struck in 2007 was among the worst on record. And it was global in nature. Financial markets seized up, world trade plummeted and the global economy went into recession. The cost of supporting banking sectors around the world reached $15 trillion. And the impact on people’s lives was severe. Many lost their jobs or saw a fall in their wages.
What’s been done to fix the global financial system?
A decade on since the start of the crisis, what’s changed?
After the crisis hit, the G20 – made up of the leaders and central bank governors from 20 major economies – set up the Financial Stability Board, which is tasked with monitoring the global financial system and making recommendations to make it serve society better.
Since then, various reforms have taken place. The video below summarises these changes: from the amount of ‘capital’ banks need to have, to new rules on bankers’ pay. While there is more work to be done, the video argues that the global financial system is today safer, simpler and fairer than it was a decade ago:
