During the crisis, distress in the banking system of some countries meant that their governments, too, faced considerable financial difficulties on account of the necessary public rescue commitments. However, this hazardous “doom loop” between banks and their sovereigns also means that sovereigns, in turn, can have a negative impact on banks.
The sad experience of the past few years shows that there is ample scope to improve the efficiency and resilience of the global financial system. By clarity of purpose and resolute implementation, we can do so. The current reform initiatives mark real progress. The fundamental objective of the G-20 measures is a resilient, global financial system that efficiently supports global growth.