Learning from the Crisis
Learning from the Crisis
Is there a model for global banking?
This chapter examines how the current financial crisis, which began in 2007, is encouraging serious consideration of a new global banking model as banking crises cannot be resolved without sufficient capital infusions tantamount to nationalization. The near-collapse and ongoing transformation of banking in the UK and the United States raise not just the question of the appropriate form of ownership in the banking sector, but also the form that banking structures, banking strategy, and banking regulation took in both countries. This chapter discusses the deregulation of the banking sector and the forms of financing designed to ensure that banks could be supported by the government without actual take over through common equity purchase. It also urges developing countries to reverse the movement from public to private ownership of banks and to consider the advantages of public ownership, especially to ensure more equitable and broad-based growth.
Keywords: financial crisis, banking, nationalization, developing countries, deregulation, financing, common equity, private ownership, banks, public ownership
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