as rating agencies and market participants adjust their methodologies for assessing and rating risk. third, there is a need for improvement in risk management practices – not least liquidity management by financial firms ; standards of credit origination ; and monitoring of the debt servicing performance of borrowers. experience suggests that prior to the current turbulence investors underestimated the tail risks to which they were exposed, including the interdependencies between credit, market and liquidity risks. improvements in stress testing can play a key role here. needless to say, such stress tests should consider the crosscountry nature of the euro area financial system. finally, greater financial stability calls for closer communication and cooperation among players in the financial system, not just within the official sector, but also between the official and private sectors. this is especially true in the euro area given its multiplicity of jurisdictions and layers of responsibility, which puts a premium on cooperation. meetings like this suggest that the lesson is well understood by all the parties involved. this can only augur well for the future.

of the negotiations and in the gats itself. the agreement ’ s design - a framework of rules coupled with national schedules of commitments allows governments to decide which sectors they will open to competition by guaranteeing the rights of foreign suppliers and also the extent of those rights. the gats commitments of many wto members do not offer unrestricted access to their markets. but significant progress has been made, and the groundwork completed for moving ahead with liberalization in future negotiations. despite the tension and sensitivities surrounding the early discussions, today 106 wto members have commitments in the sector - more than in any other sector except tourism. not all of those commitments involve liberalization - often they are bindings of the existing level of access and regulation. let us not forget that in trade negotiations liberalization is always incremental ; in the case of services this is more so since the principle of progressive liberalization has been expressly recognized. we sometimes forget that the financial services negotiations that successfully concluded in december 1997 coincided with the financial crisis in asia. contrary to what some might have feared, the crisis had no impact on the negotiations : no country withdrew or wrote down the commitments it had negotiated. even the asian countries most seriously affected made commitments to improve access to their markets for foreign financial institutions. they did so in the belief that stronger competition and greater openness would make their national financial infrastructure stronger, not weaker. in fact, the crisis seems to have strengthened the conviction that competitive financial markets are essential to restore confidence and induce the long - term investment needed for growth and development. several factors made it easier for crisis - ridden countries to embrace the wto negotiations. first, the negotiations were not concerned with the liberalization of the capital account, but purely with the terms on which foreign suppliers would be allowed to do business, subject to whatever capital controls were in force. while it is true that a government is required to allow capital flows when the country has a commitment liberalizing the supply of a service requiring such capital movement, the capital account liberalization involved is limited in extent. second, the liberalization of financial services trade takes place inside a system of rules and procedures with the necessary flexibility and safeguard clauses to address prudential concerns. governments are free to take any measure necessary to preserve the stability of the financial system and also temporary, non - discriminatory restrictions on trade in services in the event of serious balance - of - payments and external financial difficulties. in fact, nothing in the services