After the Covid-19 pandemic, what do you think are the most serious potential sources of another economic and/or financial crisis that could occur in the future?

In recent years, the scale of the occurrence of serious economic and financial crises in some regions of the world and/or on a global scale has been intensifying. The scale of the appearance of certain types of economic, financial, energy, etc. crises has been increasing since the 1970s. The abolition of gold parity for the U.S. dollar, oil crises, deregulation and liberalization of the functioning of financial markets, increasing the active role of central banks in shaping monetary policies with the possibility of adding money injected into the economy through direct purchase of treasury bonds by the central bank, abolishing some of the previously introduced systemic prudential instruments used in credit risk management, increasing the scale of international operations of investment banks and investment funds making speculative transactions in foreign capital markets are just some of the sources of the increase in the scale and frequency of financial and economic crises since the 1970s. Some types of the aforementioned crises have appeared with increasing frequency and magnitude in the current 21st century. The day on September 15, 2008, when the world's fourth-largest investment bank Lehman Brothers went bankrupt was considered the beginning of the global financial crisis. This crisis was generated by, among other things, erroneously conducted overly lax monetary policies that were supposed to favor financial markets even when assets were overvalued in capital markets, overly liberalized credit policies in mortgage lending, disregarding safety standards in credit risk management and practicing moral gambling in investment banking, and so on. In 2020, there was a pandemic economic crisis, which initially developed through the Covid-19 pandemic to then be exacerbated by large-scale lockdowns imposed in some countries on economic entities operating in selected, certain industries, mainly service sectors of the economy, and the introduction of so-called national quarantines. In some countries, where, such as Poland, the development of the cheapest renewable energy sources was blocked and slowed down in 2022, when the price of fossil fuels rose strongly, a deep energy crisis occurred. Beginning in 2021, inflation began to rise rapidly in many countries, generated by pumping large amounts of printed money into the economies, whose task was to mitigate the scale of the recession generated by the lockdowns and national quarantines introduced repeatedly during the Covid-19 pandemic. In order to limit the growth of inflation, which, as in Poland, rose to double-digit levels, the central bank raised interest rates. The effect of such anti-inflationary measures was to reduce liquidity in the financial sector, increase the cost of borrowed money, make credit more expensive and reduce the scale of investment in many sectors of the economy. The result was a recession of the economy, which in many countries appeared in the 1st half of 2023. In view of the above, the misapplied measures of monetary and/or fiscal policy eased too much led to the generation of a financial and/or economic crisis. Subsequently, the anti-crisis instruments applied more than once led to the generation of another economic crisis. In addition, a climate and environmental crisis is also developing in the long term as a result of continued high greenhouse gas emissions, ignoring issues of protecting the planet's climate, biosphere and biodiversity, slowing down the development of renewable energy sources and implementing the green transformation plan for the economy on a limited scale. In view of the above, some crises like the pandemic economic crisis of 2020, among others, were generated by new factors like the Covid-19 pandemic, which could later be referred to as so-called “black swans” due to their uniqueness, atypicality and unexpected appearance by no one. On the other hand, the key root factors of some economic and financial crises include misguided state interventionism, errors in forecasting and analysis of the macroeconomic situation, misapplied pro-growth and/or anti-crisis instruments within the framework of certain economic, fiscal, budgetary, sectoral and monetary policies pursued by the government and conducted by the central bank. In view of the above, it is probably not possible to conduct economic, monetary, etc. policies without making mistakes. It is not possible to forecast all, future impact factors, determinants shaping the macroeconomic situation and potentially all events that may lead to further economic and/or financial crises in the future. However, it is possible to learn from past mistakes, and given this knowledge, a more sustainable, secure economy can be built, processes and instruments for managing credit risk and other categories of risk can be continuously improved, financial markets, including capital markets, commodity markets, securities markets can be systemically strengthened through prudent use of prudential instruments, not ignoring the principles of financial security, not practicing moral gambling in investment banking, and so on. Perhaps in the future, the next financial and economic crises that will occur will be the result of, on the one hand, still not adequately refined systemic prudential instruments, institutional financial security arrangements, credit risk management instruments, etc., and new factors and events that are difficult to forecast, which can probably later be called the next black swans. however, there are crises that we know will worsen in the future and/or will be the source of the occurrence of increasingly serious negative effects on the economy and humans. this kind of long-term crisis already in operation is the ever-developing and worsening climate crisis and, at the same time, the environmental crisis, which is associated with the process of rapid loss of biodiversity of the planet's natural ecosystems.

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In view of the above, I address the following question to the esteemed community of scientists and researchers:

After the Covid-19 pandemic, what do you think are the most serious potential sources of another economic and/or financial crisis that could occur in the future?

What do you think are the most serious potential sources of another economic and/or financial crisis that could occur in the future?

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

The above text is entirely my own work written by me on the basis of my research.

In writing this text, I did not use other sources or automatic text generation systems.

Copyright by Dariusz Prokopowicz