On 15 June 2011, the Rafael del Pino Foundation, as part of its Master Lecture programme, welcomed Roger B. Myerson, who gave the lecture "Financial crises. A Keynesian perspective".
Roger Myerson said: "The financial crisis we experienced in 2008 showed us that financial systems in the West were not safe enough. The controls were well designed, but they needed further development. The most important thing I can say, from a moral hazard point of view, is that well-targeted reforms, to make our financial systems even safer, are the way forward to get us out of this financial crisis in the most appropriate way in the long term".
Moral hazard is crucial in explaining global investment flows, according to Professor Myerson: "One of the most important things that has happened in our lifetimes, including the financial crisis, is the tremendous improvement of the economic systems in China, India and other countries in Asia and Latin America, which have boosted the productive potential of millions of people around the world, making them richer and thus creating a more prosperous world. But why, then, is money flowing from China and these countries to America and the West and not the other way around? It is correct to say that there are great investment possibilities in China. Why, again, do I not invest my life savings there? Because, personally, I do not trust Chinese financial institutions to give me my money back if I need it. What I mean is that, obviously, every successful financial institution relies on legal and political environments that ensure that its customers are protected from fraud and deception.
