Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/251236 
Year of Publication: 
2013
Series/Report no.: 
CITYPERC Working Paper No. 2013-09
Publisher: 
City, University of London, City Political Economy Research Centre (CITYPERC), London
Abstract: 
The paper argues that the European financial system in the years following the great financial crisis started in 2007 has become increasingly fragile. Minsky's notion of fragility, on which it is based, is related to history, policy and institutions. In the current European environment, fragility depends on the rise of shadow banks' assets, the expansion of derivatives and the changes in financial regulation. All these elements have jointly triggered several feedback loops. In Minsky's opinion, policies should have the scope of thwarting self-enforcing feedback loops. Yet the policies that have been implemented so far seem to have produced the opposite effects. They have created new feedback loops that nurture fragility again. This outcome, however, is not surprising for policies may change initial conditions and have unintended consequences, as Minsky has taught us since a long time.
Subjects: 
financial fragility
Minsky
European financial system
feedback loops
regulation
thwarting policies
Document Type: 
Working Paper

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