"Unlike previous financial crises, the current crisis originated in the USA 15 months ago. And, therefore, we have a global financial crisis," RBI deputy governor Rakesh Mohan said.
The previous crisis in Asia in 1996 and the emerging markets crisis in the 1980s did not have a worldwide impact, he said, delivering the inaugural speech at 11th annual conference on 'Money and Finance'.
"The (current) crisis was also followed by a huge amount of net capital flow. Before the Asian crisis in 1996, we had witnessed a peak net capital flow of $300 billion. The current crisis also was preceded by net capital flow of trillions of dollars."
The turmoil in the international financial markets of advanced economies, which started around mid-2007, has exacerbated substantially since August 2008, the RBI Deputy Governor said.
The financial market crisis has led to the collapse of major institutions and is now beginning to impact the real economy in the advanced economies. As this crisis is unfolding, credit markets appear to be drying up in the developed world, Mohan said.
Rakesh Mohan, a noted economist, had worked in the Finance Ministry with the rank of Secretary and had been Director-General of the National Council of Applied Economic Research.
Despite having a clear knowledge about an approaching collapse in the US housing market, the regulators and other market participants failed to prevent the sub-prime crisis, he said.
