天美传媒

A decade after the collapse of Lehman Brothers, some economists and business leaders are beginning to worry about the next great crisis. But what will cause it and when will it hit?

鈥淚f we knew that, the crisis would already be happening,鈥� Patrick Bolton, a professor at Columbia Business School, said during a recent alumni session on the Barcelona campus. He added that in earlier economic history, crises occurred roughly every 20 years. 鈥淎re we safe for another 10?鈥� he asked. 鈥淚 wouldn鈥檛 want to go that far.鈥�

The session looked back at the collapse of Lehman Brothers 10 years ago to answer questions about the effect of Great Recession-era regulations on today鈥檚 economy. While panel speakers offered detailed recollections and historical analyses of the pivotal autumn of 2008, discussions ultimately steered toward the next crisis, what might cause it and when it will happen.

Stephen G. Cecchetti, a professor at Brandeis International Business School, remembered the 鈥渟urreal experience鈥� of witnessing the fall of Lehman while working at the Bank for International Settlements. He approached the 2008 crisis with a more academic and less vested interest in 鈥渞educing the frequency and severity of,鈥� rather than eradicating, future crises.

Cecchetti said he thought the next crisis would most likely stem from cybersecurity breaches. 鈥淲e need to understand these technologies,鈥� he said. 鈥淭here鈥檚 readiness on the financial side, but I worry about technology and how to guard it.鈥�

In his presentation, which concentrated on the near doubling of capital requirements under Basel III, Cecchetti also highlighted the risk of increased shadow banking 鈥� or lending and other financial transactions that are essentially unregulated.

He said that, with the notable exception of the U.K., 鈥淲e lack a framework to monitor, designate and regulate banking-like activities.鈥�

Speakers during the Q&A session seemed to coalesce around the idea that shadow banking and the new digital landscape are the likeliest catalysts of the next crash.

2008 Crisis Casts Long Shadow

Discussion of the 2008 crisis broke down along three focal points: the Basel III regulations regarding risk reduction via capital requirements, stress testing and other instruments; the status of the 鈥渢oo big to fail鈥� logic; and the evolving mindset regarding the role of central banks in stabilizing economies.

Columbia鈥檚 Bolton said it鈥檚 time to retire 鈥渢oo big to fail鈥� theories, which hold that some institutions are so large that allowing them to collapse will undermine the entire economy. This came after he labeled the Great Recession-era bailout 鈥渢he option that was just too easy.鈥�

He noted that a shortcoming of 鈥渢oo big to fail鈥� reasoning 10 years ago was how to deal with huge conglomerates operating in many countries and across various regulatory landscapes. The more recent single point of entry resolution essentially aims to shore up problems at the holding company, rather than across global affiliates and subsidiaries.

Systemically important banks (SIBs), Bolton said, are far better prepared to weather storms today than they were a decade ago. Still, he conceded there were gaps pertaining to current liquidity requirements.

Are central banks the appropriate bodies to close these and other gaps? Jean-Pierre Danthine, vice president of Swiss National Bank, described a 鈥淲hoa!鈥� reaction when central banks, and the unelected officials behind them, assumed such vast powers as lenders of last resort during the 2008 panic.

鈥淭his was never tested before,鈥� he said, 鈥渁nd the view early on was that this would be a temporary blip.鈥�

Danthine said that unaddressed questions concerning 鈥減olicy mix鈥� require a serious rethinking as he questioned the model that central banks should follow as they grow in stature as stewards of financial stability. One of his key proposals was having central banks use their balance sheets to supply demand for liquid assets.

Yet the most forceful moment of Danthine鈥檚 talk came when, referencing an Alan Greenspan phrase about the pre-crisis benefits of central bank opacity, he said, 鈥渢he end of constructive ambiguity should be the end of ambiguity.鈥� In other words, central banks must precisely define and embrace their role in stabilizing economies or risk eroding their ability to regulate upon the inevitable, unpredictable return of, in Danthine鈥檚 polite phrasing, 鈥渓ess favorable circumstances.鈥�