Financial Crisis in This Time is Different by Reinhart and Rogoff

758 Words3 Pages
People always think that the technology renovations, institutional changes and experience gains can make the world emerge from financial crisis saying that 'this time is different'. But they may be too optimistic. The outrageous truth is that each new financial crisis is not predicted or forestalled. As Reinhart and Rogoff said in their book 'This Time is Different', technology is changing, fashion is changing, but self-deception of governments and investors are not.

A banking crisis usually refers to a situation in a general "market adjustment" when faith in banking institutions falls, and people start trying to move their money to other places for safe keeping. (RationalWiki) If we need to find something in common for all financial crises, that will be excessive build-ups of debt. Excessive debt accumulation makes banking industry more profitable and more stable than it really is and it will easily be ignored at the beginning. However, if the equilibrate has been destroyed, systemic risk will grow and increases more quickly and greater than usual.

Cyprus is an island country in the Eastern Mediterranean Sea, which is based on agricultural production and tourism. In the first half of 2003, under the influence of global economic crisis and the European Crisis, the crises of Cyprus struck and caused higher unemployment and lower economic increase. As a country in Eurozone, Cyprus attracted large amount of deposit funding from overseas with its increasing nation's credit
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