Retaining part of the risk themselves, the banks could place these securities more readily, reviving a substantial channel of finance that is inactive today. Keeping the markets open Between the third and fourth quarters of 2008 world trade declined, on an annual basis, by around 20 per cent; the IMF forecasts a drop of around 3 per cent this year, the first since 1982.
The contraction of trade, which represents one third of the value of global output, has serious repercussions on growth. The siren song of protectionism is powerfully alluring in times of crisis. In the very short term it may bring some benefits and mitigate situations of real social hardship.