The Impact Of The 2008 Financial Recession

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The Financial crisis of 2008 and the following recession has had an enormous impact on the world economy. This has been reflected in a distinctive fall in real GDP growth rate, oil and energy consumption. One of the major contributors to the crisis was the failure in the world wide banking system. This factor could have been left out of the equation if the retail banks were to follow the old system of banking where instead relying on commercial papers and securitization, which are vulnerable to exogenous shocks, they were to rely on deposits from retailers and capital invested. This would mean they would only be vulnerable to runs and insolvency. In order to avoid such outbreaks to happen in the future the Basel Committee on Banking Supervision