Risks to financial stability still there – five years after the GFC

Friday, 28 June 2013  Media Alerts

What are the major risks to the worldwide banking system, five years after the Global Financial Crisis kicked the world into an era of turbulent markets and falling share prices?

The Director of the Institute of Global Finance, Professor Fariborz Moshirian from UNSW's Australian School of Business said the issues are three fold, and are particularly relevant with what appears to be an unfolding credit crunch in China, a plunging Australian Dollar, and with the stock market in Australia at a nine month low.

"Firstly, there are risks related to wholesale funding costs. These costs soared in the GFC, and could rise dramatically again," he said. "Also banks and government need to be aware of the financial cycles surrounding macroeconomics. This is quite important: no economy - or company come to that - works on a constant. However since the GFC, we have learnt much more about how these cycles work."

Professor Fariborz Moshirian added "there are also systemic risks. This is where there is a risk of the collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, due to the way the financial markets are linked. These are important policy topics that are going to be discussed at the next Institute of Global Finance conference."

More than 30 leading researchers from Europe, the US and Asia, including from the International Monetary Fund, the Asian Development Bank and the European Central Bank, will present the latest analysis and issues on Systemic Risk: Liquidity Risk, Governance, and Financial Stability will be held on 4 and 5 July 2013, at the Four Seasons Hotel in Sydney.

For further details contact Fariborz Moshirian on 0425 380626 or 02 9385 5859 or f.moshirian@unsw.edu.au

Media contacts:
Julian Lorkin: 02 9385 1574