While the world has witnessed recurrent episodes of financial crisis, global developments since 2007 have had a profound and multiple impact given the multi-dimensional nature of the ensuing crisis. First, the financial market turmoil in the subprime mortgage market unfolded itself in the form of an unprecedented global liquidity crunch triggering huge financial and economic losses.
Second, the world is now realizing the stress of growing global imbalances that have, for several months now, manifested themselves in the rising global commodity prices and have fuelled inflationary pressures. 3.