Lessons from World Bank Group Responses to Past Financial Crises
A worldwide financial crisis of enormous magnitude continues to unfold rapidly. Unlike other crises in recent decades, the current episode is rooted in industrial countries' financial systems and is affecting low-income and middle-income count...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/149131468339538525/Lessons-from-World-Bank-Group-responses-to-past-financial-crises http://hdl.handle.net/10986/28065 |
| Summary: | A worldwide financial crisis of enormous
magnitude continues to unfold rapidly. Unlike other crises
in recent decades, the current episode is rooted in
industrial countries' financial systems and is
affecting low-income and middle-income countries (MICs)
alike. Defaults on securitized sub-prime mortgages as a real
estate market bubble burst led to failures or near-failures
of several large financial institutions and a collapse of
inter-bank and commercial paper markets. A tightening of
credit, combined with declining consumer confidence, has
brought on worldwide recession with growing unemployment,
and many fear that the downturn will be severe and
protracted. At the same time, the rapidly multiplying signs
of contraction are prompting strong responses, including
fiscal stimulus packages and reductions in benchmark lending
rates, on the part of several of the affected developed
countries. The Bank Group is well placed to help mitigate
the impact of the current crisis with financing and advisory
services, and its clients are already requesting increased
support. A rapid, high-quality response that combines
financial and advisory support can do much to ease the
inevitable ramifications of the crisis. Lessons from
evaluations of previous Bank Group responses to past crises
can help inform the response to the current crisis in order
to increase its effectiveness. |
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