1. TOPIC
THE FINANCIAL CRISIS AND ITS
AFTERMATH: ADDRESSING TE NEXT DEBT
CHALLENGE
• SYED FAZLI JAWAD
• Shomaila Gohar

2. FINANCIAL CRISES OVERVIEW
 FOUR PHASES OF FINANCIAL CRISES
 CONTAIN THE CONTAGION AND STRENTHINGTH FINANCIAL
SECTORS
 COPING WITH MACRO-ECONOMIC EFFECTS
 REGULATORY AND FINANCIAL MARKET REFORM
 DEALING WITH POLITICAL, SOCIAL AND SECURITY
EFFECTS.

3. POLICY REFORM
 G-20 summit in April 2009, London.(UK & USA)
 Arguing for large and coordinated stimulus
packages.
 Germany and France who consider their
automatic stabilizer.
 increase in Gov.; expenditures for items such as
unemployment insurance that are triggered any
time in economy slows
 Plus existing stimulus programs as sufficient.

4. G-20 leaders
 G-20 leader to decide to add $ 1.1 trillion in resources
to international financial institutions.
 $7.50 billion for IMF, $ to boost Global Trades.
 And $ 100 billion for multilateral development banks.

5. Policies
 Two largest legislative action were;
 The troubled assets relief programs aimed at providing
support for financial institution.
 And the American recovery and re-investment Act of
2009, aimed at providing stimulus to the economy.

6. Policy proposal
 To change specific regulations
 Structure of regulation and supervision both in
domestic and international level.
 Recommendation for administration and for
international organization.
 Such as; IMF, World Bank, Financial stability Board,
Forums, in June 17, 2009.

7. Obama Administration Announced
 Numerous Bills have been introduced.
 Select committee to investigate causes of financial
crises provide oversight & greater accountability of
Federal Reserve and Treasury Lending activity.
 Providing funding of IMF,
 Address problems with consumer credit cards
 Deals with the US nation Debt & establish a systematic
risk monitor.

8. Problems, target of policy and action taken or possibly to take in
response to global financial crisis
Problems Target of policies Action taken or
possibly to take
Bankruptcy of financial
institution
Financial institution,
financial sectors
Capital injection through
loans or stock purchases-
increase capital
requirements
Tack over of company of
Gov., or other company
Excess toxic debt Capital base of debt
holding institutions
Write-off debt by holding
institution.
Purchase of toxic debt
through public Private
Partnership Investment
Program Gov. and
discount

9. Credit Market Freez Leading Institutions Coordinating lowering of
interest rates by Central
Banks
Capital Injection through
loans or stock purchases.
Declining stock Markets Investors Short sellers. Temporary banks on short-
sale of stocks.
Government purchase of
stocks.
Global recession, rising
unemployment, decreasing
tax revenue, declining
exports
National Governments Stimulative monetary and
Fiscal policies
Increase lending by
International Financial
Institutions
Support for unemployment

10. Countries unable to cope
with financial crises
IMF, Development Banks
National monetary
authorities and
government's
Increase resources for IMF
and world Bank
Creation of long-term
international liquidity
pools to purchase assets.
Lack of Political support to
implement changes in
policies
National Political Leaders G-20 International summit
meeting
Bilateral and plurilateral
meetings and events.

11. Conclusion
Due to world economic crises many economies have
borrows heavily from international capital markets, and
some have suffered from periodic sovereign debt,
balance of payment and banking crises.
If the financial policies and regulations are not implement
properly so it can create the problem of moral hazard
and banking crises especially with free movement of
financial capital.