The global nature of the present financial crisis has made it difficult for any single country’s policies to get it out of the crisis. In a situation in which a crisis hits a single country it only has to make sure that its own finance and banking are well regulated. It does not need to worry that poor regulation in another country is going to put its own financial system at risk. The complexity that has arisen out of the globalised financial system has made it difficult for a single country’s policies to be effective.

First, there are issues that need to be addressed in the immediate future to prevent the world economy slipping into a deeper recession. These range from solving the problem of bad assets on the balance sheets of banks to providing a monetary and fiscal stimulus.

Today, all large financial firms are global. When the US government works to put Citibank on its feet, the beneficiaries of this are all over the world, since Citibank operates practically everywhere. The assets and liabilities of big financial firms are spread all over the world, which complicates the task of understanding and resolving their problems. It also makes it politically difficult for a national government to put taxpayer money into the firm if the beneficiaries are people from other countries. Thus, if it is perceived that putting French money is going to help an East European economy more than the French taxpayer, the French government is likely to end up putting conditions on the bank’s operations to prevent that from happening.

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