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In Rememberance: World Trade Center (WTC)

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The Turner Review: A regulatory response to the global banking crisis

by Financial Services Authority (FSA)

March 2009

Abstract: Over the last 18 months, and with increasing intensity over the last six, the world's financial system has gone through its greatest crisis for a least a century, indeed arguably the greatest crisis in the history of finance capitalism. Specific national banking crises in the past have been more severe - for instance, the collapse of the US banking system between 1929 and 1933. But what is unique about this crisis is that severe financial problems have emerged simultaneously in many different countries, and that its economic impact is being felt throughout the world as a result of the increased interconnectedness of the global economy.

This does not mean that the economic recession which many countries in the world now face will be anything like as bad as that of 1929-33. The crisis of the early 1930s was made worse by policy responses which can be - and are being - avoided today. But it is clear that however effective the policy response, the economic cost of the financial crisis will be very large. We therefore need to ask profound questions about what went wrong, whether past intellectual assumptions about the nature of financial risk were seriously mistaken, and what needs to be done to reduce the probability and the severity of future financial crises.

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