Technology has practically eliminated physical divides, while financial engineering has allowed instruments to be specifically designed for certain stakeholders with certain needs at a certain point in time. As a result, financial markets today are complex and highly interlinked across national borders. This creates a value chain as much as it provides the channels for various spillovers.
We have seen, over the past three decades, the Asian Financial Crisis, the Global Financial Crisis and, more recently, the COVID-induced global recession. Although these have happened at nearly a decade’s interval between them, regulators as well as the public do not take comfort when the unexpected happens. This is the nature of crises. They are unexpected but creates significant disruptions as they unfold.