The financial crisis of 2008 was not unforeseen: it was preceded by clear warning signals with developments during the crisis that confirmed the underlying fault lines that had emerged as changed institutions, products and practices shifted the structure of the global system over the preceding decades. The transformation from a bank-based to a market-based global system dominated by large, multinational institutions based in major developed countries had occurred with minimal adjustment to the regulatory framework and no attention to the implications of those changes for systemic soundness. Among the major indications of systemic vulnerability were the unprecedented growth of financial sectors relative to the economies in which they were located; the absence of constraints on credit growth that led to unsustainable levels of debt for households, governments, some business sectors and the financial sector itself, and the extraordinary increases in international capital flows that exacerbated the pro-cyclicality of finance in both boom and downturn.
The outcome of the crisis has been deeply punishing for real sectors in many of the world
