In 2008, the world suffered the worst financial crisis since the “Great Depression” of the 1930s. Governments had to step in and bail out the banks to prevent the collapse of the global financial system. Many people around the world lost their jobs, homes and investments.
Even more worrying, there have been other shocks since 2008, including today’s looming pandemic-related financial crisis. Gone are the stress-free and tax-safe days of 60-70 years ago when banking was stable and safe.
So what went wrong? The original purpose of the financial sector was to finance the national economy by helping individuals and businesses in financial distress. Today, the divide between the financial sector and the communities it serves is widening. They no longer manage the average person’s savings account and lend it out to individual borrowers. Now, banks invest their own money, borrow money from other banks, and risk their customers’ cash.
Now money is used to make more money. Bankers and finance professionals are looking for the next big thing to invest in – whether it’s a project, industry, product, etc. They take a huge risk to drive up prices. This continued, unchecked speculation is why the banking industry has become more volatile in recent years.
The question that arises today is “When is the next big financial crisis?” everyone is talking about. It looks like we’re expecting another crash.
The 2008 crash and smaller but similar events over the past 20-25 years led to a loss of confidence in financial institutions. We hear about the government backing these banks with trillions of dollars in deposits, but nothing changes for ordinary people.
There is now a growing awareness that the current global economic system needs fixing. So what can you do? Banking is everywhere in our lives, yet many people are unaware of its impact. To make things better, we need to demystify finance, not let it intimidate us. It’s important to educate people to make their own financial decisions, rather than relying on so-called experts.
Far-reaching banking reforms must also be implemented globally. That’s what happened after the 1929 stock market crash that sparked the Great Depression. US President Franklin D. Roosevelt reformed and worked with the financial sector to resolve the crisis. This was followed by 30 years of financial stability from 1945 to 1975 without any major financial upheavals. Countries around the world followed Roosevelt’s example and implemented regulatory measures on banks to ensure that asset bubbles would not get out of control.
We have two options for the future of the world’s financial health. One is to maintain the status quo and allow the gap between ordinary people and financial institutions to continue to widen. The second is to restore and revitalize the original intention of finance to help the economy survive.
But for that we need bankers who are doing their part and willing to be regulated, and above all we need to be involved. So, is the world ready for a new financial crisis? what do you think?
Directed by: Eve Minault
