Deleveraging measures in financial sector will take time to yield results

THE LEHMAN BROTHERS filed for bankruptcy on Sept 15, 2008, triggering the global financial crisis that left the global economy tottering. Ten years on, the world is still feeling the repercussions of the crisis. Beijing News commented on Tuesday:

Learning lessons from history can help us avoid repeating the same mistakes. Although opinions vary on what caused the global financial crisis, excessive debt and credit were definitely the prime cause.

A series of financial derivatives, such as housing and asset mortgage loans, peaked in the few years prior to 2008, and asset securitization seemed to have matured. To expand the market, some banks and financial institutions lowered their credit threshold for loans, which led to systemic risks in the market and sowed the seeds of the subprime crisis. Since people could buy a house even with zero down payment, the whole financial system was exposed to risks.