The unfinished reform agenda

 

G20 politicians and rule makers are struggling to find remedies to soothe the truly severe pain inflicted by the financial crisis upon the real economy. As days go by, there seems to be more questions than answers to this quest for a final resolution. To be sure, regulators have made significant progress in identifying regulatory measures to address the causes of the crisis and corresponding regulatory gaps. So far, the most important proposals, endorsed by the G20 at the September Pittsburgh Summit, try to fix the most conspicuous market failures in the financial sector. 
In addition to regulatory reforms to mitigate lending pro-cyclicality and to discourage excessive leverage, policy makers may need to give more attention to some structural problems which can be as many time bombs for the world economy. I can see here three of such problems: (i) the oversize and leverage of financial asset trading business in some advanced countries, (ii) the astronomical levels of fiscal deficits in these advanced countries, and (iii) the ongoing global imbalances in the world economy, by Anh-Nga Tran-Nguyen.  (Read the whole article here

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