IMF Sets Up New Database of Financial Crises

As world leaders try to restructure the global financial system, it's worth reflecting on how we got to this point. A new database created by economists at the IMF tracks financial crises over the last 30 years, and it may come as a surprise that the world has had 124 of them during that time. The good news is that most were isolated in only one of three sectors—banking, currency or sovereign debt—and many involved the usual emerging-market basket cases, like Argentina and Turkey. The bad news: the number of crises has been on the rise since the early 1990s, and shows no sign of stopping. "Financial deregulation and the increase in global capital flows have definitely increased the number of crises, even as they've increased wealth," says coauthor Luc Laeven. "But we all contributed to the current situation by racking up credit cards and buying bigger houses." Moderation, not overregulation, he says, is the cure.