Communications of the ACM
Economic Crisis and Computer Science
The origin of the financial crisis is the instability of the financial sector.
The financial sector and all its components were used by speculative agents who felt free to operate thanks to relaxed regulatory structures. The consequences of this situation is a disruption in the financial market that affects the capital market in a negative way and thus millions of people.
This is not the first time in history that an economic crisis has raisen; however, in a globalized world like the one we live in now, an economic crisis affects society in deeper ways than ever before.
A globalized world will not be possible without the help of computer science and computers.
Computers (and computer programs) were important players in the crisis because financial markets use them to track and control all transactions; this way, a financial trader can simulate scenarios, forecast values, tendencies, and so on.
With this information and additional data from markets and corporations, a financial trader can speculate and thus create a snowball of situations that can produce a financial market crisis.
What can computer science do here? Well, it can establish software audits to trends in the market so it triggers some alerts or early warnings on possible signs of speculation, just to set an example. There are many other things that a financial market can do with computer programs that will help prevent future crisises.
The central point of this discussion is that while computers are a key part of the transactions in financial markets, they can also be used as a tool to speculate and destroy them and here is where some sort of regulations or controls must be in place so computer software can be used to improve or help financial transactions to be made.
Comments
Josef Dietl
In my observation, there was no shortage of warning signs around house prices, CDAs, foreign account deficits etc.
The catch is that over several years, nobody could *afford* to be the first to *act* on them.
I'm fully convinced of the opportunities associated with Computer Sciences, but I believe in order to leverage this specific opportunity, we need to look one step further at "system sciences" (Computers+people/societies): What are the incentives, what are the inhibitors for the behavior of a community like a bank employee, like a bank, the community of all banks in a country, the community of all banks world-wide, the G20 etc.
The "right" alarm systems are important, and CS has its share to play there. But only when we manage to relate the warning signs to behavior will we be able to leverage that opportunity.
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