Financial Globalization 2.0
Aftershocks from the global financial crisis have sharply reduced cross-border capital flows, as lenders, especially in Europe, have focused on domestic markets. But this retrenchment has, paradoxically, improved the overall health and stability of the global financial system.
WASHINGTON, DC – In the decade since the financial crisis began in August 2007, the contours of global finance have shifted dramatically. The total value of cross-border capital flows has shrunk by 65% over the last ten years, a decline that reflects, in particular, the sharp reduction in international banking activities.