- Interestingly, it is the state’s direct intervention role (rather than its market proactive role) that receives more attention, perhaps reflecting the importance of state-owned financial institutions in most countries of the region.

# **IV. CONCLUSIONS**

_As regards FSAP trends_ , the overall picture that emerges from this analysis has at least three facets. On the one hand, FSAPs appear to have successfully incorporated _new issues and priorities coming from above_ . This is probably the case of issues that have acquired a central status in the research and development agenda, such as the promotion of access, the consolidation of microfinance institutions, and the emphasis on improving the informational infrastructure when there are significant roadblocks to improving the contractual framework. As regards oversight, a similar evolution seems to have occurred, with increasing emphasis given to dominating issues of the day, such as global oversight and the promotion of the second and third Basel pillars.

At the same time, FSAPs have also started to _hug realities on the ground more closely_ and made progress towards promoting a more subtle and complex role for the state as regards financial development policy. The increasing importance given to pro-market activism and to improving (rather than closing) public financial institutions are good illustrations along this line of thought.

Finally, the trends in FSAP recommendations also reflect an evolution along a natural “ _product cycle_ ” in which FSAPs are increasingly shifting their attention from the center of the financial system (banks) to the periphery (non-banks), from making rules (regulation) to implementing them (supervision), and from the introduction of key building blocks (for example registries) to improving their functioning.

More generally, this exercise provided a somewhat unique window into the nuts and bolts of the process of financial developments. Many of the findings conform well to what one would expect. Basic frameworks and rules need to be put in place before focusing on how well they are applied and enforced. And the more basic and simpler naturally comes before the more sophisticated (for example, accounting precedes auditing, sector-specific oversight precedes global oversight, real pledge registries precede debtor and security registries, creditor rights precede insolvency, the first Basel pillar comes before the second and third, specialized courts precede out-of-court resolutions, etc.).

However, some issues which one would expect to have been settled long ago in the development path pop up again at later stages. This is the case, for example, of deposit insurance and government guarantees. In other cases, putting in place the right building blocks seems to take more time than would at first sight seem necessary. For example, some key building pieces which one would think to be pretty basic, such as the legal framework for creditor rights or the informational framework as a whole, do not seem to be fully in place until financial systems have matured towards their middle age. This may exert a lasting strain on financial systems’ capacity to develop in the early stages. Similarly, the development of public debt management and security markets tend to lag, 26