The Role of the State in Managing and Forestalling Systemic Financial Crises: Some Issues and Perspectives

29 Pages Posted: 4 Sep 2010

See all articles by Charles Adams

Charles Adams

National University of Singapore (NUS)

Date Written: August 17, 2010

Abstract

This paper reviews recent state interventions in financial crises and draws lessons for crisis management. A number of areas are identified where crisis management could be strengthened, including with regard to the tools and instruments used to involve the private sector in crisis resolution (with a view to reducing the recent enhanced role of official bailouts and the associated moral hazard), to allow for the orderly resolution of systemically important financial firms (to make these firms “safe to fail”), and with regard to achieving better integration with ex ante macroprudential surveillance. The paper proposes the establishment of high level systemic risk councils (SRCs) in each country with responsibility for overseeing systemic risk in both tranquil times and crisis periods and coordinating the activities of key government ministries, agencies, and the central bank.

Keywords: Global financial crisis, state intervention, macroprudential surveiilance, crisis resolution, prevention

JEL Classification: G01, E58, E01

Suggested Citation

Adams, Charles, The Role of the State in Managing and Forestalling Systemic Financial Crises: Some Issues and Perspectives (August 17, 2010). ADBI Working Paper No. 242. Available at SSRN: https://ssrn.com/abstract=1671450 or http://dx.doi.org/10.2139/ssrn.1671450

Charles Adams (Contact Author)

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

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