Didier Reynders, as Belgian minister of Finance, you have been at the front line of the financial crisis. What do you believe is the most urgent issue that needs to be addressed now?

The financial crisis is not over yet. In the short run, the focus should be on restoring confidence and lending to both enterprises and individuals. Experience from previous crises indicates that one should act quickly to remove bad loans or distressed assets from banks’ balance sheets. Hiding the problems will only delay the recovery.

The issue has an obvious technical dimension. But it also has a broader political dimension. Even today, huge discrepancies remain in the valuation of so-called “toxic” assets. This makes it difficult for States to find an adequate level of intervention. Entering at low valuations often imply new rounds of recapitalization (or shareholders’ revolt) while entering at higher valuations may lead to significant losses for taxpayers (and, ultimately, voters’ rebellion).

And beyond that? What would you say to those who say that the system has failed? That liberalism has failed?

The fact that international financial regulation has failed is obvious and cannot be denied. We need to draw the lessons from the current crisis. Beyond that, I do not believe that rejoicing over the failure of the market is very helpful unless you still believe in five year plans.

We have never claimed that markets were perfect. They are an essential building block of our prosperity and of democratic institutions. But they are not perfect. Markets need to be regulated. The invisible hand needs a skeleton. Anyway, I do not believe in the end of history. Every system produces its own excesses and mistakes. The job will never be finished. We should always be ready to learn from reality. Liberalism is not a set of dogmas. It is a very pragmatic way of looking at an ever changing World, a belief in change and freedom.

Tags: crisis, jobs, liberal solutions

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