Conclusion

The spate of financial crises and financial volatility of the last decade have not gone unnoticed, but have alerted policymakers and academics to many, often hidden, hazards of liberalised finance. If one thing was learned from the experience of the past two decades, then it was that liquidity management and control are among the most difficult challenges to financial orthodoxy and policy apparatus today. At the same time, although the causality of the build-up of progressive illiquidity has recently been noted by a number of market practitioners and financial regulators, it remains extremely unclear what is the best way to gauge and tame illiquidity at a systemic level, and how to enforce measures of crisis prevention. Hyman Minsky did not live to witness the dramas of the late 1990s-early 2000s. Yet it is telling that among the wide variety of economic perspectives on finance, it is the work of Hyman Minsky that has been revived in the wake of the recent financial explosions (Warburton 2000; Persaud 2002; Myers and Rajan 1998; Felix 2003; Kregel 2000, 2001; Pettis 2001, 2003; Wolfson 2000, 2002).