Crises and Paradigm Shift

Crises can force leaders and technocrats together, highlight failures and, more rarely, precipitate changes in ideological worldview and the prevailing consensus. In 2007–8, the worst financial and economic crises since the Great Depression of 1929 caused a paradigm shift in financial and regulatory ideology. G20 leaders and central bankers reasserted collective power and authority over financial markets and global banks to an extent and in a manner not seen since the collapse of the Bretton Woods system in 1971. The retreat of state authority reversed direction. The spell of the ‘mystical Anglo‐Saxon model of liberalisation and deregulation’ was broken. In 2014 the paradigm shift is still underway and still under attack by recalcitrant bank CEOs and their lobbyists, but the shift may be durable—signalling a major change in international regulation of the world's largest financial markets and firms.