Kenneth Williams
FIN 6644
Global Bank Crisis
For the past few decades, the world has witnessed the change of economic policies that
manipulated countries’ produc”on, stable economic indicators, and market deriva”ves created to mask the
causes of suspected instability. This central bank money control has been a concept of allevia”ng present
concerns to endure detrimental consequences in the future. During this process of Illusion, government
funding such as Social Security re”rement aid, pension funds and other equity funds are used by
governments to future borrow money, using the control of their country’s resources as collateral to
guarantee payment. However, as a result of these lending prac”ces many central banks around the world
are and have been becoming very powerful; o,en serving as the focal point of contact that oversees
government ac”vity in borrowing na”ons. As a result, their a.lia”on grows into ownership by a private
group with different interests that are not suitable for the borrowing country, causing a fundamental
divergence amongst the economy and tax policies with consequences being macroeconomic and
concerning the interests of all par”es involved.
These scenarios of banking influence having global effect have reoccurred several “mes amongst
history. specifically, Japan managed to rise and conquer a,er World War II, becoming the world’s second-
largest economy. They became accessible to a lenient credit system, rumors of sudden financial schemes,
and extreme industry expansions. This caused the real market in par”cular to experience what economists
refer to as a “bubble.” With these sudden increases of funding with minimal regula”on, the property that
housed the Imperial Palace in downtown Tokyo ended up being worth as much as the en”re state of
California. Considering these high-valued proper”es were established without any s”mula”on of sales or
liquidated assets, most of these developments remained vacant. Thus in the sequen”al years following,
stocks and real estate valued crashed by 70%.
Another scenario in global history to observe is The Asian Financial Crisis of 1997. It began with
Thailand stripping its currency of value. Other Asian export-oriented growth na”ons such as Malaysia and
Indonesia followed in hopes to ending the peg to the U.S dollar. With the specula”on amongst the world of
a financial contagion, many feared to invest into the banks in case of leveraging meltdown. It triggered a
tradi”onal bank run impelled by a sudden shock of risk that made countries discouraged in decision
making. In result, the currencies and stock market lost more than 50% of value in a short period of “me.
