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Can We Prevent the Global Fire Next Time?

With some countries beginning to get a handle on COVID-19, mostly through vaccination programs, we can hope for a post-crisis reform phase, with measures aimed at substantially reducing the probability of another global pandemic or similar public-health shock. But hope is not belief.

WASHINGTON, DC – In the immediate aftermath of the 2008 global financial crisis, measures were taken to prevent another potential systemic meltdown. The process of reform was contentious at the time, but the legislation and associated regulations that were adopted have held up remarkably well. Twelve years later, in the face of the far-reaching damage wrought by the coronavirus pandemic in 2020, large private financial firms proved more resilient, and policymakers had sufficient political backing to take steps that helped stabilize the global economy, relative to what could have happened. And they are likely to put it on the road to recovery in 2021. So, what comes next?

With some countries beginning to get a handle on COVID-19, mostly through vaccination programs, we can hope for another post-crisis reform phase, this time aimed at substantially reducing the probability of another global pandemic or similar public-health shock. But hope is not belief. Unfortunately, there are four reasons to think progress may be slower and more difficult than after the 2008 financial crisis.

First, we are not out of the woods yet. By mid-2009, the US and the world economy had turned the corner on the global financial crisis, and the G7 (and most of the G20) could agree on the need for tighter financial sector regulation. By contrast, many countries around the world, including in Europe, are still struggling with the coronavirus. It is hard to focus on a deep reform agenda with the crisis still raging and neighbors arguing about who has access to how much vaccine.

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