The modern world experiences the worst financial crisis since the times of the Great Depression which began in the s. However, today people experience even more drastic changes and negative effects on the economy than in the past.
Without exaggeration, almost every country experiences global financial crises, which gained much attention of the mass media. Bank failures, credit crunch, private defaults and mortgage crisis are just a drop in the big ocean of the evident negative effects of a global financial crisis. While only a few economists predicted the global financial crisis, but nowadays almost every scientist provides personal explanation of what went wrong at that time.
However, almost all causes are very simple. Almost all people were given credits to buy property they could not afford. Bankers bundled the loans and sold them to the investors, who were not aware of the risks they were exposed to.
The government did not pay enough attention to the banking activities and their regulation. Although all these explanations are appropriate, there are numerous other causes of the global financial crisis that are widely discussed by researchers.
However, the key reason may lie not in all those explanations suggested by economists, but in the basic human instinct — greediness and strive for huge profits. It is evident that the global financial crisis has affected every field of human life. Numerous banks have gone bankrupt and the process is still seen nowadays. Many mortgage giants were exposed to the recession. The government of the US strived to improve the situation, but it led only to the deficit in budget, affecting all fields of human life.
However, some researchers claim that the global power may be transferred from the US before the end of the crisis. Some Asian countries realize the importance of restricting their home economies to improve the consumption rates. In the past, only local communities suffered from the excess credit, but now it has affected the whole country. This in itself shows how serious the issue of recession as the US initially was never in favour of helping the troubled banks as they always believed in free market ideologies.
In Iceland, where the economy was very dependent on the finance sector, economic problems had hit them hard. The banking system virtually collapsed and the government had to borrow from the IMF and other neighbors to try and rescue the economy.
In the end, public dissatisfaction at the way the government was handling the crisis meant the Iceland government fell. The impact on the banks in European countries was not very different compared to the banks in the US.
Many institutions had to refinance there balance sheets very quarter. During market uncertainties banks were reluctant to finance other institutions and this problem led to the economic crisis become a global phenomenon.
Britain's economy in the third quarter , quashes hopes that the downturn was ending and instead marking the longest recession on record. The Office for National Statistics said British gross domestic product fell by 0. UK may be the only major economy to have contracted in the third quarter. In the UK, the jobless rate is expected to rise from 7.
So a lot has to be done on the Governments part to tackle the issue. Governments have a key role to play in providing a stable economic environment in which people and businesses can plan for the future, and growth can prosper.
ACCA has played a full part, regarding the causes of the crisis, including the roles of global macro-economic imbalances and financial innovation, failures in regulation, supervision, and corporate governance. This time ACCA has come out with the steps that the government should follow so that the UK does not fall in such a crisis again.
The first step that they want to take is to separate retail - or at the very least depositors - from other forms of banking will have taken place. This will ensure that the banks return in Private sector in a profitable way and all the ethics and risk training are well dealt with. They suggest that the government should build an environment where the credit cards can be rejected for the piggy banks; thereby building the savings culture.
The other important thing is the formulation of tax policies which is often politicized; leaving the country with only short termist approach. They also suggest that the Small and Medium sized enterprises should be elevated to Cabinet level and continuity in small business policy will be assured. The 'Think Small First' principle will not be considered as an exception but as a norm. As the global recession has demonstrated, the financial problems of a globalized world are too big to be tackled by individual countries.
The G20 offers a framework for co-ordinated action. And therefore, they suggest that the current rotating secretariat should be replaced by a new and permanent one so that in situations like these action can be taken at the earliest.
UK is also ready to be a part of such a global agreement where the developing are also given a chance to participate and learn. Banking has gone digital. Millions of customer find it convenient and faster to operate their accounts online. Despite a lot of security and passwords, accounts are still hacked and data or private information is leaked, unauthorized and incorrect payments are made online on their name.
This issue needs to be resolved soon. The ACCA suggests that the browsers and email systems should become more effective at protecting customers and their information. In the fourth quarter of , UK has finally managed to come out of recession but still the above mentioned steps need to be followed so that such an issue does not affect the country again. Essay UK - http: If this essay isn't quite what you're looking for, why not order your own custom Finance essay, dissertation or piece of coursework that answers your exact question?
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