ABSTRACT
The banking crisis that began in 2007 has disrupted dominant beliefs about the efficiency, resilience and the capacity for self-correction of global financial markets. These beliefs rested on assumptions that ‘global financial firms’, whatever their taste for risk, act rationally to ensure their survival; that the most significant threats to global financial stability stem from volatile ‘emerging market economies’; and that policy-makers in rich economies have sufficient prescience and adequate policy tools to contain the fall-out when overinflated asset bubbles burst.2
