Fifteen years after the collapse of the US investment bank Lehman Brothers triggered a devastating global financial crisis, the banking system is in trouble again. Central bankers and financial regulators each seem to bear some of the blame for the recent tumult, but there is significant disagreement over how much – and what, if anything, can be done to avoid a deeper crisis.
LONDON – This could have been a year of joy for Europe. The 20th anniversary of the fall of the Berlin Wall will be commemorated in November, and it has been five years since the European Union’s “Big Bang” enlargement. The Cold War division of Europe is well and truly over.
But, instead of setting off fireworks, the EU finds itself under fire, as the global economic crisis confronts it with the greatest challenge it has seen since 1989. After years of strong growth and remarkable resilience, the Union’s new member states in the east are being hit hard by the economic turmoil that started in the west.
Integration into the global economy, a crucial source of capital, stability, and innovation, has become a threat to many of these countries. This is true both of the region’s financial sectors and its real economies.
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