We are often asked whether the current global economic downturn might evolve to become as serious as the Great Depression of the 1930s. The difference between the Great Depression and the current economic downturn is relatively clear if one looks at the policy responses by the relevant authorities worldwide.
Unlike the time of the Great Depression, when the authorities could not take effective measures in response to failures of financial institutions, the authorities in many countries today have already formed a framework to protect depositors and are expeditiously injecting public funds into financial institutions in distress.