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April 11, 2006
Simulated financial meltdown in the US
Europe seems to be a hotbed of activity when it comes to hedge funds. Strange how hedge funds have swept the collective conscience of Europe and now consumes even its financial regulators. These regulators, who simulate a continent-wide financial crisis, fear that they are ill prepared to stop a problem.
So what does this simulation involve and why does it make these doomsday predictions? In the exercise, a collapse is simulated in a big bank with operations in several large countries. This was done to check if the European Central Bank, national central banks and finance ministries could work together to contain the crisis. According to experts, this exercise can be equated with checking if a nuclear power plant can survive a plane crashing into it.
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