The long-running Greek crisis and China’s recent stock market crash are the latest threats to the stability of the global financial system. But as our new report What research tells us and what we need to find out explains, ‘systemic risk’ – and its periodic appearance in financial crises – has been present ever since the first financial system was created and is an inevitable part of any market-based economy.
Funded by the Economic and Social Research Council, the SRC was established to investigate the risks that may trigger the next financial crisis and to develop practical tools to help policy-makers and private institutions become better prepared. Its co-directors – LSE professors Jon Danielsson and Jean-Pierre Zigrand – describe their agenda:
“We aim to develop a set of tools for policy-makers to adjust regulations to achieve the twin goals of ensuring the efficiency of the financial system and mitigating the incidence and severity of financial crises. While it is not possible to eliminate systemic risk or incidence of crises entirely, the objective should be a more resilient financial system that is less prone to disastrous crises while still delivering benefits for wider society.”
You can read the full report here.