Orderly capital account liberalization should also remain on the reform agenda. The present crisis has prompted some calls to turn back the clock and rebuild a system based on controls. This is not desirable, nor even feasible, in today's globalized economy. Nor, other than very temporarily, are administrative controls in any country's best interests. But this does not mean there should be a pell-mell rush to remove existing controls.
Liberalization needs to be orderly.
That is, it should be pursued in the context of properly sequenced financial reform and a strengthening of the economic fundamentals. The IMF, as a universal institution with surveillance responsibilities, has a special advisory role to play here. Finally, the private sector must be more involved in crisis prevention and resolution. Better information and better incentives for careful credit risk assessment could help to forestall financial crises. Many ideas are under consideration, including allowing majority voting in bond contracts to facilitate bondholder agreement for reschedulings.