Fiat lux – Shedding new light on derivatives markets.

Abstract

Not so long ago, we policymakers thought we knew just what challenges we were facing for Europe to better take advantage of globalisation through a more sustainable model: these were climate change and a rapidly ageing society. However, since 2007 we have also learnt that there was another area requiring a deep sustainability check: the financial system. What started in 2007 as a credit crisis in the US market for subprime mortgages turned into a full-blown global fi nancial crisis in 2008, following Lehman’s default and has taken us near to a sovereign debt crisis as countries face the fiscal consequences of financial instability, on top of large public indebtedness. This highlights the importance of the financial system for society as a whole and, therefore, the political imperative of mending it so that finance serves the real economy – not the other way around. We therefore need to put in place a new set of rules and principles ensuring a stable and sustainable financial system. Without this our whole economy will be impeded from prospering again and we will not be able to address the challenges outlined above.