Measuring financial risk is difficult. But what lessons, if any, have we learnt from the current crisis? This column argues against a move to leverage ratios and instead proposes continuing to measure financial risk (despite the difficulties), but with higher capital charges for banks. Focusing on the basics can only bolster central banks’ ability to fulfil their duties – looking for imbalances, and promptly tackling them with informed decisions.

The NYU Stern group – authors of the influential book Restoring Financial Stability: How to Repair a Failed System – have completed a new ebook that assesses the strengths and weaknesses of the US financial reform legislation. This column introduces the new ebook.

China’s “dollar trap” has many analysts worried about its future resolution. This column discusses a similar situation in the 1920s when France held more than half the world’s foreign reserves. France’s “sterling trap” ended disastrously. Sterling suffered a major currency crisis, French authorities lost a lot of money, and subsequent policy reactions deepened the Great Depression.

The approaching release of stress-test results is accompanied by widespread fears that the tests are not rigorous enough. This column argues that a modification to the Capital Assistance Programme would neutralise these concerns. Banks should hold the capital implied by the central scenario, and buy government insurance to cover more extreme outcomes, thus taking the aggregate risk off the leveraged institutions and breaking the link between bad economic news and the financial sector’s health.

The G20 communiqué revealed a clear attitude towards chain-reaction crises. Here one of the world’s most experienced and insightful crisis-watchers argues the G20 communiqué reflects a major improvement in the way leaders view financial crises – moving away from the view that blames the victims and towards a view that recognizes systemic crises and chain-reaction accidents involving many innocent bystanders.

The G20 is an accomplishment beyond what many expected. This column argues, however, that G20 actions will not stop the recession and that the policy framework adopted is only a sketch. There is hard work ahead translating the G20 achievements into practical action. Communiqués are but a start, not a finish, of the process of true global cooperation.

Did the Summit succeed? This column argues that, except for the promises of more resources for the IMF, the summit did not move the agenda forward. Doing more was probably impossible, but now national governments must do more at home, and very urgently. It would be a tragedy if the Summit outcome encouraged complacency.

The long awaited London Summit of G20 leaders took place on April 2. This column – written by a senior economist working within the UK government on the Summit – sets out the background, what was agreed, and what will happen as a result.

Bad debt is the root of the crisis. Fiscal stimulus may help economies for a couple of years but once the “painkilling” effect wears off, US and European economies will plunge back into crisis. The crisis won’t be over until the nonperforming assets are off the balance sheets of US and European banks.