Financial Crisis Containment and its Implications for Institutional and Legal Reform

Seraina N. Gruenewald, Law Department, University of Zurich, Switzerland

Abstract

This article analyzes financial crisis containment from a governance perspective. It depicts containment decision making by governments as a complex technical process of different stages. Deviating from the existing well-worn paradigms, the article argues that efficient crisis containment requires a clear allocation of responsibilities with explicit objectives and powers, proper channels of accountability and more transparency. It models a governance framework, the core of which is a crisis containment council. Shared responsibility and accountability on the part of the council members as they seek crisis containment would incentivize them to collaboratively decide on containment policies that correspond to the greatest degree possible with the interests of social welfare.