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Financialisation, economy, society and sustainable development

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Money for sustainable development

Better financial models can evolve from studying our economies’ weaknesses that emerged over the last 30 years. A new look at financialisation and how it could support sustainable development can support this endeavour.

Society

Financialisation, the growth of a country’s financial sector vis-à-vis its overall economy, has not evolved in a very sustainable manner, culminating in a financial crisis that has hampered economies worldwide. The EU-funded FESSUD (Financialisation, economy, society and sustainable development) project investigated how financialisation impacted economic growth over the last three decades. It looked at how financialisation affected economic, social and environmental objectives, as well as the dynamics involving financialisation, economic development, sustainable development and environment. To achieve its aims the project team studied the financial systems of 15 mostly European countries and mapped the different financialisation trajectories over the last 30 years. It mapped the various causes and consequences of the financial crisis, factoring in financial sector regulation. This led to the formulation of new approaches to regulation of the financial sector. The project team also conducted cross-comparisons of financialisation processes, economic crises and the impact on social well-being, including pensions, inequality, indebtedness and access to credit. Importantly, the team documented best practices in financial systems that encouraged social cohesion and well-being. It looked at the shifting role of the EU in global financial and monetary governance, as well as financial integration of new EU Member States. One of the key project research areas involved how financialisation neglected environmental and social sustainability, documenting related costs, policies and equity of benefits distribution. FESSUD also looked at how financialisation led to economic restructuring and effects on industry, in addition to studying industry financing. It examined good versus bad policies for their different abilities to mitigate the effects of the financial crisis and increase public welfare. The results have been disseminated through workshops, conferences and journals and online, including through the project’s website. One of the project’s important policy briefs titled ‘A proposal for voluntary degrowth by redesigning money for sustainability, justice and resilience’ has been published on the website. The project’s findings can no doubt help policymakers and the financial sector understand how finance can better serve economic, social and environmental needs.

Keywords

Sustainable development, financialisation, FESSUD, governance, economic restructuring

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