The key lesson of the Global Financial Crisis (GFC) was that a lightly-supervised accumulation of leverage can lead to a systemic crisis.  Regulatory reforms in the aftermath of the crisis focused predominantly on systemically important banks. These regulatory changes underpinned the migration of leverage risks from the traditional banking institutions toward the shadow banking sector. This reduced transparency of risk metrics associated with leverage risks and increased the global financial system’s dependency on highly leveraged investment strategies. In countries hardest hit in 2008-2014, such as Ireland, Portugal, Spain and Greece, financial repressions that followed the crisis took the form of…

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