The global financial architecture in transition

During the past quarter-century economic and financial liberalisation across the world has led to the new, market-based financial economy in which we live. This transformation of the financial system has brought considerable benefits. But as the recent episode in Argentina reminds us, it has also been accompanied by too many financial crises, especially affecting emerging market countries. Some NGOs, voices in the media, and a few economists blame "neoliberal" economic reforms for these problems. But policymakers have little appetite for a return to strict government regulations and have concentrated instead on the need to make markets function better by adopting rules-based frameworks to guide financial policies and markets. In addition to crisis prevention, the objective is to make countries more resilient in times of financial turbulence.