Lesson number 4: Every good party needs a strong bouncer In financial markets, the bouncers are the supervisors. Looking at previous issues of the IMF’s Global Financial Stability Report, the BIS Quarterly Reports, and various individual central banks’ Financial Stability Reports, it is evident that many of the causes of the financial crisis had been noted, but that they had not been acted upon.
As pointed out by our colleague Jean-Claude Trichet 2 in his capacity as chairman of the Global Economy Meetings of central bank governors at the BIS – meetings that we also attend on a regular basis – several policy makers had indicated to market participants that they needed to prepare for a significant correction.