He added that with the current crisis it was obvious that financial speculation had not been regulated, and also that financial liberalization had taken place too fast, before the authorities had the opportunity to understand how liberalization works, or to put the regulatory and human resources infrastructure in place. Since the IMF had been the main agency advocating liberalization, he urged Camdessus to now re-assess the IMF's theory and policies in light of the present crisis, instead of pushing for full capital account liberalization now. Camdessus said the question involved the need to find a balance between regulation and freedom, and to do this the analysis had to be right. That's why I was happy to study hedge funds in order to have clarity on it. This study will say that you must carefully use heavily-loaded words like speculation and speculators.
Speculation is often only good management and prudent use of our savings.
He added when governments have the wrong policy on interest rates they should not complain about speculators. What is needed is not to curb your market but not to expose your policy to speculation. He said that protection for industries under the infant industry argument had prevented countries from progressing fast enough. In reality there is a lot of imperfections in the market and we need more regulations. Don't allow the market players to protect their niche.