And I think there can be more focus. Crisis prevention is essential. Crises strike when there is a failure to detect financial stresses or imbalances, or when there is a failure to make the necessary decisions to reduce the stresses and imbalances that have been detected. In reviewing past crises, it seems to me that some economists and financial analysts saw economic conditions deteriorating and that not enough was done at the time to keep crises from gathering steam. The primary responsibility for avoiding crises lies with individual countries' own policy choices.
Further work is needed to identify the most relevant indicators.
I hope that the creation of a new capital markets section at the IMF will in fact improve crisis prevention capabilities. A necessary element of crisis prevention is the pursuit of sound policies and the development of robust financial sectors in each country. Transparency is essential. Even the most telling information is of little use if it does not reach those who rely on it. Ensuring that these assessments capture the most relevant factors and reach the private sector quickly in an easily digested format is essential both to enable markets to make informed judgments and to give countries strong incentives to pursue sound policies.