Question

how can we prevent economic crisis (for class 8)

Answer 1

Increase capital requirements for shadow banks and depository institutions and make them countercyclical.

Eliminate liquidity requirements.

Improve consumer literacy and restrict consumer leverage.

Create a Chapter 11 bankruptcy for banks.

Design a more integrated regulatory structure.

Focus on bank governance and culture.

And, in response to issues:

Temporarily resolve a financial crisis by imposing dividend restrictions and by providing government capital support that dilutes shareholders.

Enforce greater consequences on executives of failing banks