OECD Estimates $422 Billion in Financial Losses
Sunday, April 20, 2008
The Organization for Economic Co-Operation and Development (OECD), an international association that promotes a healthy global economy among democratic nations, released a report this week in which it estimates that the recent financial crisis will lead to an estimated $422 billion in losses with American banks shouldering $90 billion of these losses.
OECD added that a reformation of the financial regulatory sector is needed to keep up with globalization and modern financial markets. While OECD encourages reform, they are pushing for changes that will encourage some regulation, while also remaining cautious of further constraining the markets or market innovation.
In the report, Thomas Wieser, Director General of the Austrian Ministry of Finance, said solutions need to be implemented that consider the impact of globalization and the “division of labor” related to global imbalances.
The recommendations go on to say, “We need to ensure a cooperative framework for financial markets that takes account of new realities, and enhances stability, whilst retaining efficiency. OECD is uniquely placed to provide in-depth analysis and recommendation on reforms needed to adapt the regulatory framework to the new financial landscape.”
When discussing solutions that would end the cycle of decline or tightening financial markets, OECD suggested that it could take months for the banks to achieve the capital levels neeeded to create market stability.
“It could take six to 12 months for banks to grow themselves out of losses of this size, and longer if capital for actual expansion were required,” the OECD's report concluded.
Kerri Panchuk | 04.16.08
OECD added that a reformation of the financial regulatory sector is needed to keep up with globalization and modern financial markets. While OECD encourages reform, they are pushing for changes that will encourage some regulation, while also remaining cautious of further constraining the markets or market innovation.
In the report, Thomas Wieser, Director General of the Austrian Ministry of Finance, said solutions need to be implemented that consider the impact of globalization and the “division of labor” related to global imbalances.
The recommendations go on to say, “We need to ensure a cooperative framework for financial markets that takes account of new realities, and enhances stability, whilst retaining efficiency. OECD is uniquely placed to provide in-depth analysis and recommendation on reforms needed to adapt the regulatory framework to the new financial landscape.”
When discussing solutions that would end the cycle of decline or tightening financial markets, OECD suggested that it could take months for the banks to achieve the capital levels neeeded to create market stability.
“It could take six to 12 months for banks to grow themselves out of losses of this size, and longer if capital for actual expansion were required,” the OECD's report concluded.
Kerri Panchuk | 04.16.08
