Economist Cameron Bagrie reveals what it would take for another global financial crisis amid banking turmoil

A prominent economist has revealed what he thinks would have to happen for the world to enter another global financial crisis (GFC) following the collapse of two big banks.

It comes after the head of ANZ warned the latest turmoil in the global banking system has the potential to trigger a financial crisis - but stopped short of predicting a repeat of 2008's GFC.

"It's a crisis for some… but is it a financial crisis? Who knows," ANZ chief executive Shayne Elliot said. "Does it have the potential to be one? Yes, it does have the potential to be one."

His comments come after the collapse of multiple major banks in the US and Europe. Banks would now likely look to tighten up on lending to reduce their risk, the chair of the US central bank said last week. 

But, in an interview with AM, independent economist Cameron Bagrie said the current turmoil wasn't enough to trigger another GFC.

Bagrie said "everything's a possibility" but a GFC wasn't a reality in the current economic environment.

"Let's keep Chicken Little in the coup - the sky's a long way away from falling," he told AM host Ryan Bridge.

"In 2008, the big issue for banks way back then… they couldn't access capital. Global credit markets effectively froze up."

Bagrie said another GFC would require those credit markets to freeze again.

Cameron Bagrie.
Cameron Bagrie. Photo credit: AM

"Are we anywhere near that at the moment? The answer is no," he said. "What we've got is some parts of the banking system around the globe are under a fair bit of pressure and that reflects a combination of economic factors but there's a common denominator here… and it looks like mismanagement, and it looks like a lack of oversight by certain regulators."

Earlier this month, the Swiss bank Credit Suisse underwent an emergency takeover after its shares took a tumble. That came just days after the collapse of US lenders Silicon Valley and Signature banks.