The financial system problems have been at the heart of the recent crisis. There is a need for authorities to take prompt action to close insolvent financial institutions and improve banking supervision and prudential standards. This is a sine qua non in a world of globalized financial markets. Private markets cannot function efficiently without such information. Finally, the importance of good governance cannot be overemphasized.
Transparency is only one element of good governance.
Others pertain to the creation of institutions and systems that limit the scope for ad hoc decision making, for rent seeking activities, and for undesirable preferential treatment of economic entities. Good governance is essential for restoring market confidence in an economy. This has been a learning process for us all. Even the countries that have been the envy of other developing countries in terms of strong macroeconomic performance for more than a decade need to be alert to imminent risks stemming from those key areas and to be prepared to take policy action on a timely basis once required by the economic situation. There is no room for complacency.