In an op-ed today in the Financial Times, Martin Wolf believes there are five Rs to the end of this crisis: rescue, recovery, rebalancing, regulation and reform. We are pretty much done with rescuing, after the significant amount of liquidity injections in the market. Not only did the programs help stop the bleeding of the system, it also took part in the market’s slow recovery. However, the write notes that while at that stage, there are still a lot about rebalancing, regulation and reform that we have to face. That is especially true for the latter two. In the long run, he said, there are three things that we must get, along with a reform in the monetary system: a resolution regime for all financial institutions, with costs falling on creditors; the movement of virtually all trades into organised clearing houses or exchanges; and systems of remuneration which ensure that the management of rescued institutions always loses heavily.
See his op-ed here.