effectively. there are many ways to promote such standards without developing an inappropriately exclusive and restrictive club of participants. for example, in any set of standards there should surely be an enhanced level of transparency in the way domestic finance operates and is supervised. this is essential if investors are to make more knowledgeable commitments and supervisors are to judge the soundness of such commitments by their financial institutions. a better understanding of financial regimes as yet unseasoned in the vicissitudes of our international financial system also will enable counterparties to more appropriately evaluate the credit standing of institutions investing in such financial systems. there should be no mechanism, however, to insulate investors from making foolish decisions, but some of the ill - advised investing of recent years can be avoided in the future if investors, their supervisors, and counterparties, are more appropriately forewarned. to be sure, counterparties often exchange otherwise confidential information as a condition of a transaction. but broader dissemination of detailed disclosures by governments, financial institutions, and firms is required if the greater risks inherent in our vastly expanded global financial structure are to be contained. a market system can approach an appropriate equilibrium only if the signals to which individual market participants respond are accurate and adequate to the needs of the adjustment process. product and asset prices, interest rates, debt by maturity, and detailed accounts of central banks and private enterprises are among the signals so essential to the effective functioning of a global economy. i find it difficult to believe, for example, that the crises that arose in thailand and korea would have been nearly so virulent had their central banks published data prior to the crises on net reserves instead of the not very informative gross reserve positions only. some inappropriate capital inflows would almost surely have been withheld and policymakers would have been forced to make difficult choices more promptly if earlier evidence of difficulty had emerged. as a consequence, the g - 10 central banks and the imf initiated an effort to establish standards for disclosure of on - and off - balance - sheet foreign currency activities of the public sector by countries that participate, or aspire to participate, in international capital markets. the focus of this work was the authorities ’ foreign currency liquidity position, which consists of foreign exchange resources that can be easily mobilized, adjusted for potential drains on those resources. this work was part of a larger effort to enhance disclosure of a broader set of economic and financial data under the imf special data dissemination standard. such transparency suggests a second standard worth

newer financial technologies are producing, the answer, as it always has been, is less leverage, i. e. less debt, more equity, and, hence, a larger buffer against adversity and contagion. a third standard could be a legal infrastructure that enables the inevitable bankruptcies that will occur in today ’ s complex world to be adjudicated in a manner that minimizes the disruption and contagion that can surface if ready resolutions to default are not available. a fourth standard is the obvious necessity of sound monetary and fiscal policies whose absence was so often the cause of earlier international financial crises. with increased emphasis on private international capital flows, especially interbank flows, private misjudgments within flawed economic structures have been the major contributors to recent problems. but inappropriate macropolicies also have been a factor for some emerging market economies in the current crisis. there are, of course, numerous other elements of sound international finance that are worthy of detailed consideration, but the aforementioned would constitute a good start. even so, improvements in transparency, commercial and legal structures, as well as supervision cannot be implemented quickly. such improvements and the transition to a more effective and stable international financial system will take time. the current crisis, accordingly, has had to be addressed with ad hoc remedies. it is essential, however, that those remedies not conflict with a broader vision of how our new international financial system will function as we enter the next century.