Global economic conditions have been deteriorating sharply since mid-
September 2008. Lending has dropped abruptly, credit spreads have
widened sharply, stock markets have plunged and economies everywhere
are stumbling. Governments around the world have undertaken
unprecedented measures, including some coordinated intervention.
However, global economic prospects remain troubled, and further policy
action is required.
In order to better understand the task before policy makers as
they chart a new direction, this paper examines how the global
economy arrived at its current predicament, looking back at the
sequence of events that contributed to create havoc in financial
markets, as well as the policy response they produced. In light of these
events, we examine the impact on Latin American financial markets
The global nature of the current crisis underscores the need for
coordinating the policy response at the global level, as well as
advancing towards a new international financial architecture that will
make possible a more effective response to the build-up of systemic pressures.