The increasing interconnectedness of global financial systems has failed to universally deliver on some of its projected outcomes. For instance, while capital flows have increased, this hasn’t necessarily translated into reduced poverty or income inequality in all regions. Furthermore, the promised benefits of increased financial stability and reduced vulnerability to economic shocks have not always materialized, as evidenced by periodic financial crises that have impacted economies worldwide.
Understanding the limitations of global financial integration is crucial for policymakers and researchers. Analyzing where these interconnected systems have fallen short allows for more effective policy design, aimed at mitigating risks and promoting more equitable and sustainable economic growth. Historical analysis of financial crises and their impact provides valuable context for assessing the efficacy of current international financial regulations and institutions. It also informs debates on the role of international cooperation in addressing systemic risks and promoting financial stability.