crises in 1997, and the devaluation of the russian rouble in 1998. but they were not cost - free : in the absence of using the exchange rate as a shock absorber, the burden of adjustment in the economy under a currency board agreement necessarily falls on wages and prices. in the case of argentina, the rigidity of the hard peg came to the forefront in the wake of a series of external shocks in early 1999 – notably the higher cost of financing to emerging markets, the sharp devaluation of the brazilian real, the rapidly appreciating us dollar, and falling commodity prices. the straitjacket imposed by the currency board cast doubts on argentina ’ s medium - term economic performance and concerns about its ability to service and refinance debt were further compounded by the relative fiscal laxity in previous years. as the credibility of the currency board came under increasing pressure, the country required policy adjustments but also sustained signs of support from the official sector. yet argentina ’ s misfortune is that, as its need for official financing was increasing, opinions about how multilateral agencies should act when faced with emerging market crises were changing – in particular, with regards to the need of engaging private creditors ( particularly bondholders ) in the resolution of debt problems. the last imf package in support of argentina ( september 2001 ), for example, contained specific provisions to this end. in the subsequent months, fund officials publicly encouraged the argentinean authorities to reach an agreement with private sector agents over debt - exchange operations. and in december 2001, the fund suspended its loan programmes with the country. while private sector involvement in crisis resolution should be welcome, one may wonder if it should be the sole instrument to deal with such circumstances. many feel that the official sector was rather unkind to argentina. after all, its macroeconomic indicators – particularly its fiscal accounts, which were the main source of concern – were broadly the same ( or better ) than other countries which had received large imf funding in recent years, such as turkey or brazil. argentina ’ s central government debt in 2001 was less than 55 per cent of gdp, and its government deficit ( including the provinces ) amounted to less than 6 per cent of gdp in the same year. in contrast, turkey posted a 57. 4 per cent debt - to - gdp ratio and a government deficit of 11. 6 per cent of gdp in 2000, right before its currency and banking crises. brazil had a government deficit of 7.

year calling for an international initiative to update accounting standards so as to adequately deal with the complexity of derivative financial instruments. we should do our utmost to ensure that the enron affair serves as a powerful incentive to speed up efforts in this field. second, the case highlights the question of adequate oversight of financial activities undertaken by non - financial corporations. despite being the main dealer, market - maker, and liquidity provider in important areas of the energy and other derivatives markets, enron was not required, by either regulators or market practice, to disclose information to its counterparties, or to set aside capital against its trading risks. the absence of such mechanisms prevented an early detection of the problem and might have even created incentives for imprudent risk - taking. finally, the case suggests that our system is not sufficiently alert to possible conflicts of interest. the combination of auditing and consulting in the enron case is only one example. such conflicts arise whenever a financial institution provides corporate finance and similar services to a specific client who issues securities in which the financial institution can invest its own funds or those of its clients. all in all, these three issues give cause for concern and also deserve careful consideration by public authorities. my feeling here is that, if a player such as enron is not under the control of regulators, it should be under tight market control exercised by analysts, accountants, shareholders and lending banks. if these endogenous controllers fail to be alert, they should be sanctioned in the form of monetary losses or regulatory constraints. argentina : hands - off approach coupled with official sector weakness let me turn to argentina. here, the lessons are at the international macro - economic level. not too long ago, argentina was the focus of attention, though for very different reasons than now. in the early 1990s, “ neo - liberal ” economic reforms were implemented ; hyperinflation was brought to a halt ; the economy was progressively deregulated and privatised. as macro - economic stability was achieved, foreign capital poured into the economy and growth quickly resumed. in a continent that had just emerged from the debt crisis of the 1980s and with very few success stories to tell, argentina ’ s experience under this economic paradigm was very positive for much of the 1990s, growing at an average rate of nearly 5 per cent from 1991 to 1998. this was a period marked by a series of external shocks, which argentina ’ s currency board successfully overcame, namely, the “ tequila ” crisis in 1995, the east asian