By now we seem to have a general consensus that accommodative monetary policy conditions in developed markets laid the foundation for an aggressive search for yield, which resulted in mispricing of risk on a large scale, coupled with some over-zealous “financial innovation”.
The resultant combination of reckless lending and unsophisticated borrowing, which started in the USA ended up engulfing large parts of the financial world. A need for change Against this background I attended the Annual Meetings of the International Monetary Fund (IMF) and the World Bank last week.