A few years ago, countries were seeking to expand their financial sector (move toward the left in the chart) in order to accelerate economic growth. But the crisis has made states more aware of the economic and political risks associated with over-sized banks, as demonstrated by the crisis in Iceland. The crisis has also illustrated the interdependence of the world banking system and the costs of letting foreign banks fail, highlighting the importance of international regulation. The following articles discuss how best to fix finance—through national regulation or international coordination.
VoxEU.org: What G20 Leaders Must Do to Fix the Financial System
Economist: A Plan B for Global Finance
Setser: The Shape of Things to Come
VoxEU.org: Reforming the Financial System
Davis: IMF Urges Global Financial Rules