Safeguarding financial integration
The ongoing European financial crisis was both predictable and preventable. The next crisis will be as well. Hence the two relevant questions are what should policymakers be doing to avoid unnecessary financial turmoil and why are they so reluctant to take the necessary measures – particularly when the costs, both human and financial, are so disproportionate. The purpose of this talk is to derive the ‘lessons’ of recent European experience and to show how these lessons have been learned, time and again, through the experience of financial integration both within countries and between them. This historical precedence is important to highlight the political complexity of developing more robust financial institutions. It also makes it easier to reframe the challenge in safeguarding financial integration. Politicians and policymakers are free to ignore the lessons of history, but only if they understand and acknowledge true costs involved in doing so.