Almost every ten years, the world economy has experienced either small or big scale financial crisis. Why we cant prevent it since it is a man made crisis? Here are some of my suggestions:
1. Global Level: needs to revise the current global financial and economic governance institutions such as the IMF and World Bank. It needs to focuses more on inclusive growth and people centered development. It needs to create an effective early warning system in the financial market and set up a monitoring system. Democratic control of the financial institutions is necessary.
2. Regional Level: regional institutions are emerging to be the key actor and solution provider to many regional issues. EU and ASEAN are regarded as an important rescuers in time of crisis. Macroeconomic policy coordination and financial policy harmonization are necessary to prevent and cope with the crisis. It is therefore necessary and urgent to strengthen regional institutions and coordination. It is an important political process to address economic issues generated from political issues.
3. National level: local banks need to encourage more local deposit and reduce their too much dependency on external credit/finances. The culture of saving is important but it needs a good investment bank. Clear distinction between consumers’ bank and investment bank should be encouraged.
4. Good governance should be the core to implement these three levels of preventive mechanisms and solution provision. Human based development cooperation approach is crucial for long term sustainability.