Table of Contents
Overview of the Financial System
The financial industry is witnessing some challenges with the global economic outlook deteriorating, the European sovereign debt crisis intensifying, and investor confidence decreasing in the ability of policy-makers to respond. These changes in the global economic environment present both significant challenges and opportunities. Following the inception of the prevailing financial tragedy, global financial stability is still not assured and significant policy challenges stay put. Balance sheet restructuring is defective and financial leverage is still very high. The global financial crisis can be attributed to the following: the deterioration in the global economic outlook, the intensification of the European sovereign debt crisis and growing questioning of the ability of policy-makers to respond . In recent times, a series of shocks have recently buffeted the global financial system: fresh market turbulence emanating from the euro area periphery, the credit downgrade of the United States and signs of an economic slowdown . Regulation and Policies
At the global level, regulatory reforms are still needed to put the financial sector on a sounder footing. The G-20 is undertaking a radical and comprehensive program to strengthen the regulation, supervision and infrastructure of the global financial system. The fundamental objective of the G-20 measures is a resilient, global financial system that efficiently supports global growth. Its goals are to build a financial system where financial institutions and markets play critical and complementary roles to support long-term economic prosperity, which requires institutions that are adequately capitalized, with sufficient liquidity buffers to manage shocks. Authorities are increasingly hearing concerns about the pitch of the playing field for Basel III implementation. The G-20’s comprehensive reform program seeks...