The UN Stiglitz Commission of Experts on Reforms of the International Monetary and Financial System posits that economic globalisation has produced increasing income inequality both within and between countries. Widening inequality has important consequences for the evolution and resolution of the current financial and economic crisis.

This paper draws on academic literature and documentation regarding the current debate surrounding the global financial crisis. It analyses how a combination of wealth inequality within countries and imbalances between countries has contributed to financial instability and the recent crisis. It is structured in five sections. After the introduction, the second section looks at how within country inequality and polarisation contribute to financial instability.