But it seems reasonable to assume that some common causes lay behind both the crisis and the imbalances themselves. International capital flows have made countries increasingly interconnected and interdependent. At the same time, major transformations have occurred over the past decade in our international environment. The monetary and financial system has become truly “multipolar”. An increasing number of countries, both developed and emerging, have become active participants in the global capital market. While there are currently three main currency blocs, at least one (the Chinese RMB) and maybe other additional systemic currencies will emerge in the future. Participants in the international financial system are increasingly diverse from the point of view of their economic structure, their demography, their level of development, and, more importantly, their social choices and preferences. For instance, different saving rates may be seen as resulting from divergent time preferences. Likewise, diversity in capital account regimes may, to some extent, reflect different choices and tradeoffs between efficiency and stability in the financial infrastructure. These characteristics will most likely persist over time. A large number of different countries, with different preferences, will permanently be linked and interdependent through growing and active international capital markets. It is not clear, at this stage, how the coexistence and interaction between national financial systems worldwide will finally play out.

First, countries could come to a common understanding about the core elements and principles governing their financial markets development and regulations. Full harmonisation is neither desirable nor feasible. But policy‐induced divergences may prove very destabilising and lead to a reduction in welfare. It should be possible to agree on the core principles governing, for instance, capital account regimes, the treatment and resolution of internationally‐active financial institutions, deposit insurance, and the organization and functioning of securities markets. Divergences in financial development are a fact of life. Some of them reflect true social choices and preferences that must be respected and accommodated. Others result from deliberate or inadvertent policy‐induced distortions, which should have been reduced or eliminated. Disentangling these two sources of divergences in financial development should be a priority in the international agenda. Second, the search for an efficient and powerful “financial safety net” should be pursued. Stabilising the demand for international reserves would bring huge benefits in terms of world welfare. At present, reserve accumulation can only occur through a conjunction of balance of payment surplus and some degree of exchange rate intervention. In addition, if sterilisation proves difficult or impossible, it also leads to unwanted changes in monetary policy. Precautionary reserve accumulation, however legitimate, unavoidably creates side effects for domestic macro policies as well as spillover effects on other countries. All countries, therefore have a common interest in finding ways to disconnect reserve accumulation from exchange rate management and, more generally, from balance of payment situations and monetary policies. The difficulties, however, are huge.