On-Going Issues on the Global Financial Crisis. Introduction

The primary functions of a financial system are to supply clearing and settlement of payments, to ensure resource pooling and to transfer those economic resources through time and space, as well as to provide price information on assets by correctly assessing and managing risks. A financial crisis is a market failure which destroys or dramatically impairs these fundamental functions, especially the financial intermediation process and the function of liquidity transformation, which results in substantial social costs. Unquestionably, the recent dramatic collapse of the banking and financial system fits this definition. Almost all the fundamental functions of a financial system were altered abruptly and globally...