Homework Question on Global Financial Crisis
- The global financial crisis underscored the weakness of the international monetary regime with respect to the economic rights andduties of states.
- Please discuss:
Which of declarations or charters studied in this section should be strengthened codified or enforced to reduce such international economic criminal activity?
Homework Answer on Global Financial Crisis
The formulation and enforcement of laws and regulations at the international level, which could help prevent the financial chaos that led to the global financial crisis, is difficult. Kurki (2009) states that the biggest impediment to enforcing financial sanity in the international arena is national and regional politics. States will always look to take care of their interests with little regard to the international agenda. Regions can also have different approaches to tackling the same issue. These differences in approach make it difficult for states to agree upon common measures that could prevent future financial crises.
In spite of these disagreements, there is need to formulate and enforce international laws for regulating international finance. The IMF should be strengthened and given the necessary capacity to monitor and intervene in financial circumstances likely to precipitate a crisis. The IMF should be ready to provide financial assistance whenever need arises. However, the assistance should be structured in such a way that countries do not avoid it until it is too late.
The global rules for bankers also need to be strictly enforced. All banks must raise and maintain their capital reserves to the stipulated levels to guard against insolvencies.The declaration to reform the credit rating agencies should be enforced. The financial world is very dependent on the ratings, which they use to make investment decisions. If the ratings system is flawed, investors can make loss-making decisions based on the erroneous ratings. There also needs to be increased regulation in the financial industry (Can Lessons from the Recent Financial Crisis, 2011).