The Conference Board of Canada has outlined 10 lessons to help business leaders and policy-makers avoid another financial collapse.
In a new book, the board alleges the “design” of public policy played a critical role in the events that led to the global financial meltdown in 2008.
The book, Crisis and Intervention: Lessons from the Financial Meltdown and Recession, claims that economic players at all levels should focus on the lessons at hand as the financial system recovers.
“When the good times return – and they will – we need to have taken steps to avoid repeating crucial mistakes,” said Glen Hodgson, the board’s senior vice-president, chief economist and editor of the book. “The worst of the recession and financial crisis is over. What is not over, however, is the need to adapt in how we act and organize ourselves to avoid the worst impacts of the next financial crisis.”
Among the 10 lessons the book outlines are:
- Canada’s fiscal stimulus spending and low interest rates helped the country weather the worst of the recession and “kick-start” the economy.
- The recession delayed impending workforce shortages, and the baby boomer retirement will force employers to compete “fiercely” for skilled workers.
- The financial sector must be treated differently from other industries through regulation and greater transparency.
- Public sector financial institutions can be a critical “backstop” that provide credit when the lending markets tighten.
- Co-ordination between global bodies such as the International Monetary Fund, World Bank and G-20 was critical during the crisis and should remain strong.
- Local governments do not have the fiscal “powers and muscle” to pull their communities from a recession.
- Governments must implement new measures to get their debt under control.