Reserve Bank of New Zealand Governor Alan Bollard makes the following observations about the lessons from the global financial crisis in his book Crisis: One Central Bank Governor and the Global Financial Collapse:- The world's financial system and the wo
Reserve Bank of New Zealand Governor Alan Bollard makes the following observations about the lessons from the global financial crisis in his book Crisis: One Central Bank Governor and the Global Financial Collapse:
- The world's financial system and the world's economy are inextricably linked;
- global imbalances can build up over a long period and eventually rebalancing has to happen;
- price signals can diverge from economic fundamentals for an extended time;
- the United States had a long period of loose monetary policy following the East Asian crisis, and East Asia over-relied on indebted Western consumers as the main drivers of growth;
- major monetary and fiscal stimulus has worked reasonably well to prevent further deterioration, far better than it did in the 1930s;
- competitive stimulation, competitive capital controls and competitive exchange rate policy will ultimately hurt everyone;
- the crisis has damaged the old northern countries much more than emerging markets, changing the global economic balance of power;
- the disruption disguised economic trends;
- we will need to see how the exit from stimulus measures work to judge their success; so far the solutions are resulting in more expensive capital.
