t capital inflow which enabled lowered costs of wholesale funding for domestic banks in international markets, reduced long term interest rates and increased supply of domestic credit which again, raised housing prices (Merrouche, & Nier, 2010). The compression of the spread between the long and short rates as a result of capital inflows and the previously examined monetary policy of the US Federal Reserve induced investors to seek riskier strategies and increase their leverage. The implications of these trade imbalances was critical in the event of the GFC, with the strong depreciation in the US dollar, sharp increases in interest rates and the overall market shrinking in confidence.
             It must be highlighted that the build-up of such financial imbalances were due to inappropriate or lack of adequate supervisory and regulatory policies in place both in the US and world markets (Merrouche, & Nier, 2010). Relevant parties and government mechanisms failed to prevent such a crisis and i
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