A golden age of finance – when globalization spread capital promiscuously, markets evolved rapidly, businesses could raise money for all kinds of new and expanding projects, and ordinary people had unprecedented access to credit – has now ended, leaving behind a trail of pain and ruin. Many banks have failed; many more would collapse without government aid. Millions of people have lost their jobs; millions more have lost their life savings.

No surprise, then, that demand is rising for a new international financial architecture. But, while returning to the world of 30 years ago – re-imposing capital controls, re-regulating the banking system, and rolling back financial innovation – would curtail the risk of a new global financial contagion, it would also likely impede millions of people’s chances to rise out of poverty and improve their lives. So, how can the world create a financial system that is both stable and dynamic enough to sustain economic growth and opportunity?

Barry Eichengreen, Professor of Economics at the University of California at Berkeley and a former senior policy advisor at the IMF, has both the economic and the historical understanding needed to assess the alternatives that lay ahead for the world economy. Eichengreen’s scholarship has examined the world’s financial system at its most perilous turning points, from the breakdown of the gold standard in the 1930’s to the reconstruction of the world economy following the devastation of the Second World War.

Each month, in The New Financial Order, written exclusively for Project Syndicate, Barry Eichengreen analyzes the latest economic and regulatory developments and draws out their practical implications.

A golden age of finance – when globalization spread capital promiscuously, markets evolved rapidly, businesses could raise money for all kinds of new and expanding projects, and ordinary people had unprecedented access to credit – has now ended, leaving behind a trail of pain and ruin. Many banks have failed; many more would collapse without government aid. Millions of people have lost their jobs; millions more have lost their life savings.

No surprise, then, that demand is rising for a new international financial architecture. But, while returning to the world of 30 years ago – re-imposing capital controls, re-regulating the banking system, and rolling back financial innovation – would curtail the risk of a new global financial contagion, it would also likely impede millions of people’s chances to rise out of poverty and improve their lives. So, how can the world create a financial system that is both stable and dynamic enough to sustain economic growth and opportunity?

Barry Eichengreen, Professor of Economics at the University of California at Berkeley and a former senior policy advisor at the IMF, has both the economic and the historical understanding needed to assess the alternatives that lay ahead for the world economy. Eichengreen’s scholarship has examined the world’s financial system at its most perilous turning points, from the breakdown of the gold standard in the 1930’s to the reconstruction of the world economy following the devastation of the Second World War.

Each month, in The New Financial Order, written exclusively for Project Syndicate, Barry Eichengreen analyzes the latest economic and regulatory developments and draws out their practical implications.