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Abstract

Based on Goldman Sachs’ model and the state of current affairs, an underlying possibility of a financial crisis occurring in the foreseeable future does exist. This could be due to ongoing trade war and negotiations with different countries, the new policies introduced by political parties and their respective impacts, high amounts of corporate and student debts along with auto loans in the economy, thus indicating signs of excessive leverage and resulting in depressing consumer confidence. International issues such as Brexit, the existing currency and debt crisis with Turkey, and China’s debt bubble could also contribute to the global growth slowdowns. Experts such as Nouriel Roubini, Brunello Rosa, Diego Zuluaga, Arthur Guarino, and many more believe that the macroeconomic variables highlighted above are the probable catalysts of the next crisis. Therefore, this paper discusses two issues, Shadow Banking and Financial Technology, which could potentially imbalance the financial markets but are not well addressed to the stakeholders of the macroeconomy, regarding their causes and implications. Moreover, it chats about how they stemmed from the Global Financial Crisis (GFC) of 2000-2008 and how they pose growing risks to the current monetary system. This paper does not consider or highlight the influences of the global pandemic known as the COVID-19 pandemic.

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