This document discusses the global financial crisis of 2007-2008 and its implications for international financial institutions. It aims to identify the performance of IFIs, determine the causes of the crisis in the US, and examine the implications for IFIs. The causes included changes in credit availability, greed, and the housing slump. This led to failures of banks like Northern Rock and Lehman Brothers. The implications for the US included losses, declining household borrowing costs, and effects on the stock market, insurance companies, and US-China relations. Recommendations include regulating systemic risk, increasing transparency, and reforming the financial system.

1. GB30403
CURRENT GLOBAL FINANCIAL
CRISIS & ITS IMPLICATION ON IFI:
THE CASE OF US REGION
ROGER FEDERER
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2. OBJECTIVE
 To identify the performance of international
financial institution.
 To determine the causes of the global financial
crisis in United States.
 To identify the implications of global financial
crisis in United States to the international
financial institution.
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3. PERFORMANCE OF
INTERNATIONAL FINANCIAL
INSTITUTION
 Surveillance strategy
 Emerging market economies strategy
 Capacity building strategy
 Governance strategy
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4. CAUSES OF THE GLOBAL
FINANCIAL CRISIS IN U.S
 Dramatic change in the ability to create new lines
of credit
• Cheap credit crated more money in the system and
people wanted to spend that money
 Greed
• Thousands of people took out loans larger than they
could afford
 Housing slump
• Depressed housing prices caused further
complications
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5. DISCUSSION AND FINDINGS
 Causes have been highlighted by various
analysts.
• An interest-based and debt-driven financial system
• Subprime mortgages and securitization
• Monetary policy and low interest rates
• Credit growth and predatory techniques by lenders
• The complexity and mispricing of the risks of new
products
• Liquidity, leveraging and the fear of contagion
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6. CONT…
• Regulatory and supervisory failures
• Transparency and disclosure
• The role of rating agencies
• The effect of financial globalization
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7. DISCUSSION AND FINDINGS:
IMPACTS TO THE FINANCIAL
INSTITUTIONS
 Northern Rock
• Involve in home construction and mortgage lending
 Bankruptcy of Lehman Brothers
• the financial crisis entered an acute phase marked by
failures of prominent American and European banks
and efforts by the American and European
governments to rescue troubled financial institutions
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8. DISCUSSION AND FINDINGS:
IMPLICATION TO THE U.S
ECONOMY
 US had to bear the excess payment of expenses
using the foreign loans
 Declining in cost of household borrowing in the
US
 Huge losses in securities due to loss of investor
confidence on global stock markets and a
decline in credit availability
 Effect to insurance companies
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9. Cont..
 The expectation on short-term funding disruption
could have minimal ratings implications for
traditional and alternative asset managers
 The effect of global crisis has make the
relationship between US and China become
international attention
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10. RECOMMENDATIONS
 Regulating systematic risk
 Separating propriety trade
 Information transparency
 Creating a robust and resilient financial system
 Capital flow management
 Internationalization of currencies
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11. CONCLUSION
• Many factor such as subprime lending crisis,
miss-pricing risk, under-pricing risk, become a
reason for the global financial crisis in U.S
• Three steps to settle the global financial crisis:
– establishing moral constraints on greed to maximize
profit, wealth and consumption
– strengthening market discipline that will exercise a
restraint on leverage, excessive lending and
derivatives
– reforming the system’s structure combine with
prudential regulation and supervision to prevent crises,
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12. Thank You
Q&A
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