Underlying Causes of the Crisis: The Build-Up of Risks and Imbalances
One would like to know “THE” cause of the crisis; however, the run up to the crisis is a complex issue. There is not a unique cause but a series of factors, both at macroeconomic and microeconomic level, that contributed to the build-up of risks and imbalances and drove the expansion of the financial system: abundant global liquidity, rapid credit growth, credits backed by the value of the collateral, high levels of leverage, real estate bubbles, deregulation, financial innovation, technological development, the euro, globalization, supervision too focused on individual institutions and not on the global picture, originate-to-distribute model of lending, complex and ...
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