Financial Liberalization: In Retrospect and the Way Ahead

The present investment flows fall far short of present requirements; the chapter will begin with an overview of the reasons, and in doing so, it will demonstrate that looking ahead tapping most growth opportunities will critically depend on taking a medium or long-term approach. This is in veritable contrast to what has prevailed for over two decades in the global financial system which almost encapsulated by what may be termed as short-termism. This chapter does not rehash the argument against financial liberalization, as a matter of fact it demonstrates that there exists an exigent need for a deeper and continued process of liberalization in the context or realm of long-term finance. It will then proceed with a substantiation of the criticality of stepping up the pace of financial development. This will be followed by an enumeration of the main changes in post-crisis financial regulation, and in doing so, it will demonstrate that the “existence political economy of reform” wields a discernible influence in determining the expediency, continuity and nature of reform.