address the evolving financial system and the theoretical dimension of the foreign exchange...

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address the evolving financial system and the theoretical dimension of the foreign exchange determination and theintervention in the foreign exchange markets by governments to resolve the crises.

Please select two financial crises one more recent and another one of your choice that had a global and/ or a regional implication, find the root causes of the financial crises, identify commonalities/differences and point out lessons learned to avoid future crises ( 500 words)

Please utilize the resources to respond to the question. Identify all sources and use quotations markings as needed

Sumit · Accepted Answer

A financial crisis is a crisis in which the value of the assets declines steeply and business and the consumers are unable to pay the debts. During the crisis the liquidity of the financial institutions decline because of the panic in which the investors withdraw their money from the financial institutions. Two financial crises selected are:
(a). 2007-08 Credit Crisis: The reason for the crisis of 2007-08 was the cheap credit being offered and the relaxed ending standards which led a bubble in the housing markets. The main instrument that was used was the Credit Default Swaps. When the default rates rose on the swaps, the financial institutions had on their books trillions of dollars of investments whose value had decreased due to the crisis. The major impact was felt by the people owing home loans because many of them either lost their jobs or their savings and were unable to pay the mortgages on their home loans.

address the evolving financial system and the theoretical dimension of the foreign exchange determination and theintervention in the foreign exchange markets by governments to resolve the crises....

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