Washingtonpost.

Newsweek Interactive, LLC

The International Financial System

Author(s): Zanny Minton Beddoes
Source: Foreign Policy, No. 116 (Autumn, 1999), pp. 16-27
Published by: Washingtonpost.Newsweek Interactive, LLC
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 THE INTERNATION
FINANCIALSYSTEM
The recent spate of crises in
emerging markets around the world
has shattered the consensus over
the benefits of unfettered capital
A flows and prompted calls for a

VI 'I new global financial architecture.

However, a closer examination of
the causes underlying the world's
financial woes suggests the need
not for a radical restructuring, but
for some commonsense repairs.
byZannyMintonBeddoes

There Is a Global Market for Capital

Not really. Although huge amountsof money move aroundthe
world almost instantaneously-grosstradingon foreignexchange
marketsis now worthabout$1.5 trilliona day,whereasin the mid-
1980sit amountedto less than $200 billion-a singleglobalmarket
for capitalhas not emerged.Some countriesdo not take in private
foreigncapitalat all. There are at least 13 nations,mostlyin sub-
SaharanAfrica,whoseonly sourceof outsidefinanceis foreignaid.
Forall the furorover"emerging markets," only 18 developingcoun-
trieshave regularaccessto privatecapital.
Evenif morecountrieshadaccessto foreignsourcesof privatecap-
ital, it wouldnot meanthata unifiedglobalcapitalmarketexisted.If
thereweresucha market,then hugefundsfromcountrieswithample
savingswouldflow to profitableinvestmentopportunitiesabroad.
Moreover,pricesof equivalentassetswouldtend to be roughlythe
samein differentcountries.

ZANNY MINTON BEDDOESis Washington

economics fortheEconomist.
correspondent

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 MintonBeddoes

Neitherof thosetwoexpectationsbearsanyrelationto reality.First,

althoughthe overallamountsof moneythatmoveinternationally are
enormous,the net amountsthatgo fromone countryto another-and
staythere-are muchsmaller.Evenin richcountries,mostsavingand
investmentarestilldoneat home.And althoughprivatecapitalflows
havesurgedfrom$50 billionin 1990to $152billionin 1998,emerging
economieshave,on average,beenableto financeonly 10 percentof
theirtotalinvestmentwithforeigncapitalduringthe 1990s.
Second,contraryto textbooktheory,the pricesof similarassetsare
not the same in differentcountries.Consider,for example, the
returnson comparativelysafe assets, such as governmentbonds.
Amongwealthycountries,governmentbondswhoseyieldsare cal-
culatedin a commoncurrencydo not provideidenticalreturns.This
slight discrepancyin returnsoccursbecauseinvestorsworryabout
unforeseenchanges in the exchange rate, as well as the risk of
default,while tradingin foreigncurrencies.In developingcountries,
these risksareeven higher,so the pricesof "equivalent"assetsvary
enormously. Although markets areindeedbecoming moreintegrated-
due to innovationsin technology,the removalof capitalcontrols,
and the increasein the internationalscopeof investors-we arefar
froma trulyglobalcapitalmarket.

Allowing the Free Movement of Capital in and

out of a Country Stimulates Economic Growth

Probably.Until recently,the conventionalwisdomamongpolicy-

makerswasthatdevelopingcountrieswerewell advisedto followthe
exampleof rich countriesand eliminatecapitalcontrols.Economic
theorysuggestsseveralreasonswhy free capitalflows are good for
economicgrowth.First,justas freetradeallowsfor a moreefficient
allocationof goods,free capitalflows enablesavingsto be sent to
theirmostproductiveusesregardless of geography
orpoliticalbound-
aries.This argumentsuggestscapital shouldflow from developed
countriesto developingones, as developedcountriesshouldhave
higher savings while developing countries should have more prof-
itable investment opportunities.
Second, capital mobility allows a country to insure itself against
sudden drops in export revenues or other financial shocks from
abroad.If, for example, Mexico were to sufferfrom a temporarydrop
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ThinkAgain

in oil prices,it could borrowabroadinsteadof drasticallycutting

consumptionat home. Third, foreign capital flows, particularly
direct investment, allow a countryto importforeign technology
and expertise,therebyacceleratingits economic growth.
The recentspateof emerging-market crises,however,has cracked
this consensus.Manyemergingeconomiesthat have freedthe entry
andexit of foreigncapitalhaveundergonespectacular financialcrises
accompaniedby huge economic costs. Private capitalmarketsseem
to dryup justwhenan emergingmarketgetshit by an outsideshock,
suchas a collapsein oil pricesor an increasein worldinterestrates.
Overall,economistshave been unableto find any statisticalrela-
tionshipbetweencapitalflowsandeconomicgrowth.
Criticsof open capitalregimeshave been quickto jumpon these
developmentsas proofthat the goal of freeingcapitalflowsis mis-
conceived.Theyarguethatthe risksinvolvedin capitalmobilityout-
weighthe benefitsfordevelopingcountries.The truthprobablylies
somewherein the middle.Recentcrisesshowthat premature capital
liberalizationis mosthazardouswhencountries'banksareundercap-
italizedand poorlysupervised.These crises,however,do not prove
the follyof the wholeidea.

Emerging-Market Crashes Are More

Frequent and Severe Than Ever Before
Not really.Even the most casualreaderof newspaperheadlines
knowsthat manydevelopingcountries-Brazil,Indonesia,Mexico,
Russia,South Korea,and Thailand-have faceddramaticcurrency
crisesin recent years.But a casualnewspaperreader15 yearsago
couldhaveverywellreachedthe sameconclusion.Currencycrisesin
emergingeconomiesarenothingnew.Duringthe 1980sdebt crisis,
manydevelopingcountrieswerehit hardas foreigncapitalstopped
flowing in and startedfleeing out. Between 1979 and 1983, for
instance,13 countrieslostforeigncapitalworth,on net, morethan3
percentof grossdomesticproduct(GDP)withinone year.Bythe same
measure,14 countriesexperiencedseriouscapital flight between
1994 and 1998. The picture is more nuanced when examined in
terms of regional developments. In Asia, the number of such crises
has shot up in the late 1990s, while Latin America, in fact, has seen
fewer crises in the 1990s than in the 1980s.
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 MintonBeddoes

Gaugingthe severityof a currencycrisis dependson how it is

measured.Judgingby how much capitalfled, Latin Americasaw
worsecrisesin the 1980sthan in the 1990s.Argentina,forexample,
lost foreign capital worth an enormous20 percent of GDPin
1982-83, comparedwith a reversalof 4 percentof GDPin 1995. In
Asia,however,the late 1990shavebroughtfarworsecrisesthanany-
thing experiencedearlier.Thailandsuffereda reversalof capital
flowswortha whopping26 percentof GDPbetween1996 and 1997.
Judgingby their impacton economicoutput,the recent financial
criseshave been broaderthan previousones. They have affecteda
greatershareof globalGDP.Theyhave alsocausedsubstantialreces-
sions, though it seems that economic recoveryis occurringmore
quicklythan it did duringthe 1980sdebtcrisis.

Financial Crises Spread Because Investors Panic

Not always. One of the most perniciouscharacteristics of today's
financialturmoilhas been the virulencewith which it has spread
fromone countryto another.Thailand'sdecisionin July1997to float
its currency,the baht, led to a pan-Asiancrisiswithin a coupleof
months.The causesof this"contagion" arehardto understand. Many
peopleblamepanicamonginvestors.Scaredandirrationalinvestors,
the argumentgoes,pull theirmoneyout of all emergingmarkets.
Infact,investorsmightbebehaving in a perfectly
rational manner. They
for be
might, instance, reevaluating theirinvestments in the lightof new
exchangerates.The economicprospects of somecountries worsenwhen
theirtradingpartners devalue.Thatwascertainlythe casein Southeast
Asia,wheremassivedevaluation in somecountries reducedthe competi-
tivenessof others.OnceThailand's bahthadcollapsedin July1997,for
instance,the relativecompetitiveness of Indonesia,Malaysia, and the
Philippinesworsened sharply.Investorsmight alsohave been rational
in
theirdecisionto sell,iftheyfearedeveryone elsewassellingtoo.Moreover,
firms'internalcomputer modelsthataredesignedspecifically to manage
riskmightpromotecontagion: Thesemodelssuggest, forinstance,thatif
investorslostmoneyon Russianbonds,theyshouldrebalance theirover-
all portfolioby selling equivalentassetsin other emergingmarkets(say
Brazilianbonds).Such argumentsmakeperfectsensewhen appliedat the
level of the individualinvestor.However,collectivelythey createan irra-
tionaloutcome,causingwell-managedcountriesto sufferfinancialcrises.

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Think
Again

Some Words to Invest By

Arbitrage:The processof driving aggressive financial strategies
prices of related assets, or the that are prohibitedto mutual
sameassetsin differentmarkets, funds.
towardconsistencybypurchasing
assetswhencheapin one market Lenderof LastResort:
and selling them when dear in Traditionally, anentity,government,
another. or national central bank that
extendscreditto an illiquid,but
Bail In: When the privatesector uninsured, financialinstitutionto
is encouraged-throughpressure preventits failure.Morerecently,
tactics or the placement of there have been proposalsfor
conditionson officialsupport- governments or multilateral
to participatewith its own funds institutionsto playa similarrole
in providingfinancialrelieffor a forsovereignborrowers.
troubleddebtor.
Long-TermCapitalFlows: The
BailOut:Whenloansorgrantsare movementof capital from one
provided-usually bya government, countryto anotherwitha maturity
centralbank,and/ormultilateral that is longer than one year.
(suchastheInternational Examples include direct
institution
Monetary Fund)-to helpa nation, investmentsin fixed assetssuch
company,or individualremain as manufacturingplants and
solvent. long-termportfolioinvestments
in stocksandbonds.
Derivatives: Financial instru-
mentswhosevaluedependson the Moral Hazard:The impactthat
value of underlyinginvestments, insurance,whetherit is implicit
indices,orassets.Futuresandstock or explicit (includinglender-of-
optionsaretwo commontypesof last-resortactivity),mayhave in
derivatives. increasingthe risks (or hazard)
that investorsmay undertakein
Due Diligence: The processof lendingstrategies.
byinvestors-
research---performed
into the details of a potential Short-Term CapitalFlows:
investment. The movement of capitalfromone
country to another with a less
HedgeFunds:Largely unregulated than one-yearmaturity. Examples
andprivately managedinvestment includeshort-term loansandliquid
funds that are permittedto use investments in stockmarkets.

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 MintonBeddoes

Bad Banking Causes Most FinancialCrises

Absolutely.Moreoftenthannot, recentfinancialcriseshavebeentrig-
geredby externalfinancialshocksthat are amplifiedby failedfixed
exchangerateregimes: Countries attemptto defendtheirexchangerates
bysellingoffmoreandmoreforeignreserves, promptingwidespread spec-
ulationof animminentcurrency devaluation,andleadingin turnto even
morecapitalflight.However,the rootcauseof thesecrisesis usuallya
weakbankingsystem.In manydevelopingcountries,undercapitalized
andbadlysupervised banksborrowed toomuchshort-term moneyabroad
andlentit to dubiousprojectsathome.Theysuffered fromcurrency mis-
matches(banksborrowed in dollarsandlentin localcurrency, convinced
thatexchangerateswouldstaystable)andmaturity mismatches (inThai-
for
land, instance, some banks were on
borrowing the30-daymarketand
lendingfor multiyear construction projects).Cronyismandcorruption
madetheseweakbankseven weakeras theymadeloansto veryrisky,
unworthy projectsownedbytheirshareholders andmanagers.
Foreignbanksalso beartheirshareof the blame.Convincedthat
governments wouldbailout insolventbanksin timesof crisis,interna-
tionallendersmadeextremelyriskyloanswithoutduediligence.They
wereencouraged by faultyinternationalbankingstandards (the "Basle
CapitalAccord")thatfavorshort-term ratherthanlong-termlending
bybanksanddo not discriminate effectivelybetweenassetsof different
risks.Fortunately,
a centralthemeof globalfinancialreformis improving
bankingstandards. is rapidlybeingmadeon thisfront.
Progress
We Need a New "Global FinancialArchitecture"
That dependson what you mean. The frequencyand severityof
recentfinancialcriseshave fueledcallsfor a radicalredesignof the
rulesof globalfinance.PresidentBill Clinton wants to "adaptthe
international
financialarchitecture
to the 21stcentury";Britishprime
ministerTonyBlairwantsa "newBrettonWoodsfora new millenni-
um."Countlessacademicsandpunditshavepublishedpapersandedi-
torialson how to revampthe system.Some want to scrapthe
InternationalMonetaryFund(IMF) altogether;otherswant to createa
global central bank;still others want a globalbankruptcycourt.
Sadly,most of these radicalideas are either ill-advisedor politically
unfeasible(or both). A "new architecture"is thereforehighly unlikely.

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ThinkAgain

But thereis a lot of interiordecoratinggoingon. Ledby the Group

of Sevencountries, a modestbutusefulagendaof globalreformis taking
shape.It includes the developmentof internationalstandardsof good
behavioron everythingfrominformationprovisionto corporategov-
ernance.The IMFhas a new loanfacilityto help staveoff contagion,
andthereis a growingconsensusamongdecisionmakersthatgreater
emphasisneeds to be placedon internationalfinancialregulation.
The globalfinancialstructuremaynot be completelyremodeledas a
result,but it will certainlybe sprucedup.

Global Financial Reform Must Concentrate on

ControllingCapital Flows
No. Scaredby recentcapitalmarketcrises,severalcommentatorswantto
putthe geniebackin the bottle.Onlybycontrolling capitalflows,they
argue,can developingcountriessurvivethe turbulence of the interna-
tional economy.The most radicalproposalscall for halting,or even
reversing,the wholetrendtowardfreercapitalflows.The lessextreme
approach wouldlimitthe paceandscaleof investments untilfinancial
systemsin emergingeconomieswerein sufficiently goodshapeto cope
withlargeflowsof foreignmoney.Andmoreandmorepeopleagreethat
it is okayforcountriesto discourage highlyvolatileshort-term flowsby
taxingthem.Chile is regarded as the primeexample.Formostof the
1990s,it forcedallcompanies andbanksthatborrowed abroadto deposit
30 percentof theirproceedsin anunremunerated accountat the central
bankfora year(thiswas,in effect,a heftytaxon short-term borrowing).
Ironically,however,Chilesuspended thisrequirement in 1998,justas it
wasbeingheldupasa rolemodel.
Themoreradicalideasaresimplynotviable.Thespeedandcomplexity
of financialtransactions
in theInformation Agemakeit allbutimpossible
fora countryto reinstate
capitalcontrolson a long-termbasis(although, as
has
Malaysia shown,capital outflow controlscan work quiteeffectivelyfor
a while).Slowingdowntheprocess ofcapitalinflowsmakesmoresense,but
it alsomaybehardto enforce. TheCzechRepublic, forinstance,triedand
failedto enforcecontrolson capitalinflows.Evenin Chile,the policy
reducedthe shareof short-termflowsbutdidnot reducethe overalllevelof
capital inflows.And even if the strategydoes work,it comes at a cost:
Interestratesin emergingmarketsstayhigherthan they need to, as local
and internationalcapitalmarketsremainartificially
separated.
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 Minton
Beddoes

A Global Capital Market Needs a

Global Central Bank
Soundsright,butit'sunrealistic. Centralbanksplayan important rolein
nationaleconomies.Theyarethe lendersof lastresort.Whena viable
bankor indeedthe entirebankingsystemsuffersa lossof liquidity-say
becausea computer systembreaksdownorbecausepeoplesuddenly panic
and withdrawtheirmoneyen masse-the centralbankcan provide
moneyto stopthe wholesystemfromcollapsing. Advocatesof a global
centralbankmakea similarargument at the international level.They
maintainthatthe worldneedsan organization thatcanprovidelimitless
liquidityto countrieshit by a sudden-andunjustified-lossof market
confidence.Manysuggestthat the IMFshoulddo the job and should
receivea commensurate increasein resources fromitsmember countries.
the
Unfortunately, analogy doesnot quite work. unlike
First, a central
bankthatcanprintmoney,the IMFwillneverhaveaccessto limitless
resources.Consequently, althoughit is the main international crisis
manager, it will always be constrained as a crisislender. Second, the
IMFis a much more politicizedinstitution and, therefore,less
autonomousthanmostnationalcentralbanks.Centralbanksdecide
whetheror not to bail out individualbanksbasedon whetherthese
banksaremerelyilliquidor actuallyinsolvent.Makingthatdistinction
for countriesis much harder.Moreover, it is politicallyunlikelythat
important countries willgounaided, eveniftheyaretechnically insolvent.
Thatwasthecasein Russia,forexample.
Thesedifferences meanthattherisksofmoralhazard-wheninvestors
takeirresponsible risksconfidentthatthe IMFwillbailthemout-rise as
thefund'sreserveincreases. In addition,it is not obviousthatthe IMFis
the best institutionto deal with a trulysystemicproblem,suchas a
globallossof liquidity.Thecentralbanksof the threemajorcurrencies-
the dollar,euro,and yen-are farbetterequippedto loosen global
liquidityconditionsthroughcoordinated cutsin interestrates.

The IMFIs More of a Problem Than a Solution

A widespreadbut mistakenclaim. The IMFis probablyas unpopularas
it has ever been in its 50-yearhistory.Criticismsabout its handling of
recent financialcrisesabound.Morefundamentalcritiquessuggestthat
the IMF'svery existence causes,or at least exacerbates,financialcrises.
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ThinkAgain

Someof the tacticalcriticismsarevalid.The IMFfailedto foresee

the severityof the AsianCrisis(asdidvirtuallyeveryone).As a result,
the fund demandedthat countriestightentheir fiscalpolicies-an
approachthat, with the benefitof hindsight,now seemsexcessively
stringent.Othercriticismsaremorecontroversial. Somepundits,for
instance,claimthat the IMFdemandedtoo maThy structuralreforms
in crisiscountries,therebyworseningthe situation.They arguethat
breakingup SouthKorea'schaebols (largebusinessgroups)ordisman-
tling Indonesia'sexportmonopolieswasnot crucialto solvingthose
countries'currencycrisesandonly addedto the market's uncertainty.
That maybe true,but these reformswerenecessary.Moreover,it is
unlikelythat they wouldhave been implementedonce the senseof
crisiswasover.
The mostviciousdisagreements are aboutmonetarypolicy.From
JosephStiglitz, chief economistat the WorldBank,to JeffreySachs,
an outspokenIMFbasherfromHarvardUniversity,comesthe criti-
cism that the fund demandedexcessivelytight monetarypolicies.
They arguethat by forcingcrisis-afflicted countriesto raise their
interestrates,the IMFdeepenedthe recessions.The IMF,in contrast,
claimsthat lowerinterestrateswouldhave meanteven weakercur-
renciesandevenbiggerdebtproblems forAsiancompaniesandhigher
overallinflation.Althoughthe fundhasproducedstudiesto support
its position,the skepticsremainunconvinced.
Moreprofoundargumentsagainstthe fun&dconcern the risksof
moralhazardit generates.By bailingout countriesin trouble,the
argumentgoes, the IMFinducesrecklessbehavioron the part of
investorsandcountries,as both sidesareconfidentthat theywill be
bailedout if troublehits. Whetherthat criticismis validdependson
whetherbailoutsdo in factcausecrisesandwhetherinvestorsactually
escapescot-free.

Bailouts Are to Blame for International

Economic Crises
No. A casualglance seemsto supportthis view:There have been
plenty of prominent financial crises and plenty of massive bailouts.
Unfortunately,just as the magnitudeof financial crises is easily exag-
gerated,so too is the size of the bailouts. Although many recent IMF
packageshave had big headline numbers,much of the money never
24 FOREIGN POLICY

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 MintonBeddoes

materialized.Indonesia,for instance,waspromisedover $40 billion

of bail-outmoneyin 1997. So far,less than $15 billionhas actually
been disbursed(althoughthesenumbersareconstantlychanging).It
was promisedby individualgovernmentsthat had no intentionof
actuallyprovidingthe cash.
Moreover,it is hard to arguethat developing-country govern-
mentsreallysufferfrommoralhazard.Do governmentslookforward
to the traumaof a crisis-the hugerecessions,the IMFausteritymea-
sures,and the routinepurgingof financeministers?Farmorelikely
is that short-termistpoliticiansfind it hard to undertaketough
reformsbeforean economiccrisisforcesthem to do so. Investors,
however,are morelikely to base their behavioron the prospectof
bailouts.Anecdotal evidence aboundsthat shows this is exactly
what they were doing in several countries. Investment banks
involvedin Russiangovernmentbonds,for instance,talkedopenly
about a "moral-hazard play."Investorswere betting on a bailout.
Fortunately,the fact that Russiadid not ultimatelyget bailedout-
and that investorslost a lot of money-should help reducethe risks
of moralhazard,at leastfor a while.

Private Investors Usually Escape Crises Scot-free

Not necessarily.Conventionalwisdomholds that fat cats on Wall

Streethaveemergedtriumphant fromrecentcrises,whilepoorpeople
in developingcountrieshave suffered.A few investorshave escaped
lightly.In 1995,forinstance,peopleholdingMexicantesobonos (dollar-
denominatedgovernmentdebt) were paid off, courtesyof the
IMF-U.S. governmentsupportpackage.But most investorshave
been hit, and hit hard,by the crisesin emergingmarkets.Anyone
who madeloansto Russialost a hugeamountof money.Manybanks
that hadlent to Asianfirms,especiallyin Indonesia,tooka hit. And
anyone who invested in emerging-market equities sufferedhuge
losses-at least in 1998, when virtuallyall emergingmarketsplum-
meted.Forexample,Russia'sstockmarketlost nearly90 percentof
its value.The InternationalFinancialCorporation's compositeindex
of emerging-marketequities fell 24 percent in dollar terms last year.
Although there has been considerablerecovery this year, emerging
markets have still massively underperformedAmerica's stock mar-
ket-hardly a stellar record.

FALL 1999 25

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ThinkAgain

The Emerging-MarketBoom Was a Bubble That

Has Permanently Burst
Think Again.The hypethatsurrounded investmentin emergingmar-
kets duringthe early1990swas extraordinary. Privatecapital-from
mutualfundsto hedgefundsandprivateinvestors-pouredintodevel-
opingcountriesin searchof high returns.Afterthe recentfinancial
crises,the glamourof emergingeconomieshaswanedandthe investor
basehas contractedsharply.Becausethe currentinvestorbase is so
small,emerging-market assetsareextremelyvolatile.
But it wouldbe a mistaketo concludethat emergingmarketswill
alwaysbe on the margin.In the longrun,the reasonsforinvestingthere
areas attractiveas ever.Emerging marketsarerelativelypoor,withbig
investmentopportunities forthe agingpopulations of the richworldto
earnhighreturns. Startingfrom a low capitalbase,theseeconomieshave
thepotentialforrapidgrowth.Therecentcriseshavebeena wake-up call:
Theyhaveshowntheneedforgoodpolicies,strongfinancialsectors,and
transparency in emergingmarkets. Thesereforms arefarmoreimportant
than a "newglobalarchitecture." Provideddevelopingcountrieskeep
implementing thesereforms,thereis no reasonwhyemergingmarkets
shouldnot becomean ever-growing assetclass.Eventually,
if thisrouteis
we
followed, really willhave a globalcapitalmarket.

WANT TO KNOW MORE?

One problemwith the reformof globalfinanceis thatmuchof what

is writtenon the subjectis arcaneand impenetrableto nonecono-
mists.An importantexception-and a goodintroductory overview-
is BarryEichengreen'sGlobalizingCapital: A History of the
InternationalEconomicSystem (Princeton:PrincetonUniversity
Press, 1996). Eichengreen's latest book, Toward a New
International Financial Architecture: A Practical Post-Asia
Agenda (Washington:Institutefor InternationalEconomics, 1999), is
anequallygoodsummary of thereformdebate.Fora moreskepticalper-
spectiveon free capitalflows,try Dani Rodrik's"The New Global
Economyand DevelopingCountries:MakingOpennessWork,"
OverseasDevelopment CouncilPolicyEssay,no. 24, (Washington:
OverseasDevelopment Council,1999).Foran impassioned-ifuncon-
26 FOREIGN POLICY

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 Minton
Beddoes

vincing-lament, see George Soros'The Crisis of Global Capitalism:

Open Society Endangered (New York:PublicAffairs,1998).
FOREIGNPOLICY magazinehas servedas a forumfor extensivedebate
over how to reformthe internationalfinancialsystemin the wakeof the
recent economic crises.See Robert Wade's"The Fight Over Capital
Flows" (FOREIGN POLICY, Winter1998-99), ClaudeSmadja's"The End
of Complacency"(FOREIGN POLICY, Winter 1998-99), and David
Rothkopf's "The Disinformation Age" (FOREIGN POLICY,Spring1999).
The most comprehensivesourceof topical informationon financial
crises and reformof the internationalfinancial system can be found
online at a Web site maintained by Nouriel Roubini of New York
University. Both the International Monetary Fund and the World
Bank maintain excellent Web sites with specific sections on interna-
tional financial reform.For official reportsand information,the Web
sites of financeministriesand centralbanksfromGroupof Seven coun-
tries areuseful,as is that of the Bank for InternationalSettlements.
Forlinksto theseandotherrelevantWebsites,aswellasa comprehensive
indexof relatedFOREIGNPOLICYarticles,accesswww.foreignpolicy.com.
ii;
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