Gaping Fault Lines in the Global Financial Stability Architecture: Lessons from the US Sub-Prime Crisis

The US sub-prime crisis has been a prime revelation of monumental failure by every responsible agent in the market, starting from macroeconomic policy makers, to regulators, to rating agencies, to international standard setting bodies to even the smartest of all investment bankers. This paper aims at identifying the key unpleasant policy challenges that have surfaced in the aftermath of the crisis, while also trying to decipher the sub-prime black box. In the process of documenting the wide ranging and thought provoking post-crisis suggestions from the scattered literature, the paper highlights the gaping fault lines in the existing global financial stability architecture