Current financial crisis and regulatory implications

This contribution discusses the origins of the Great Recession and also offers suggestions for possible cures. The focus in explaining the origins of the crisis is on two features: the experience in the us with financial liberalisation is most telling in terms of the cause of the current crisis. Financial liberalisation enabled an important financial innovation in the shape of the subprime mortgage market. Lessons from the current crisis are discussed along with the economic policies pursued by the us authorities. Potential economic policies after the crisis is over are suggested drawing on the lessons derived from the current experience.