Otmar and I have debated this issue on many occasions, and these discussions--together with recent research carried out at the European Central Bank, the Bank for International Settlements, and elsewhere--have been both challenging and stimulating. The preparation of this talk has afforded me a welcome opportunity to reexamine my thinking on this subject.
There are differing views as to the origins of the global financial crisis, but it is widely accepted that that a combination of weak or light-touch regulation of the banking system, coupled with some rather questionable innovations in the banking sector, were at the epicenter of the crisis.