the fsap assessments is well - known to the ifis from their traditional work and it is actually a much appreciated role by the domestic authorities. on an fsap mission it is quite common that high officials from the country concerned, in private, remind the ifi representatives not to forget to mention certain shortcomings. if you plan to conduct fsap - like assessments without the involvement of the imf or world bank, it is important that you establish a process which ensures the integrity of the assessment. the fsap is not only a way to identify weaknesses but also a tool for prioritisation of remedying these weaknesses and for providing technical assistance. an important part of the fsap outcome is to leave behind a list of recommended remedial action, setting out the priorities. since the scope of the fsap is broad, prioritisation should become easier and more balanced than if assessments were conducted following a piecemeal approach. the fsap process also contributes by informing about new research findings and about good practices used in other countries. the future fsaps by now, fsaps have been performed in more than 130 countries. this covers almost all important countries in a global financial perspective, with a few notable exceptions such as the us and china. it is thus natural to start thinking about the future of the fsap process. several alternatives could be envisaged, and they are not mutually exclusive : • simple updates of earlier fsaps to ensure that countries have taken care of their weaknesses and that no new ones have developed. • a change in the scope of fsaps, for instance to better take into account the cross - border aspects of financial sector strengths and vulnerabilities. • a different dimension is whether future fsaps should be open to all countries or mainly to those having a bearing on the stability of the international financial system. • another discussion involves to what extent there could be closer integration between the fsaps and the article iv processes. some of these “ future fsaps ” have in fact already started, albeit on a small scale and could be regarded as trial assessments in the search of the ideal format. there have been some fsap update missions and the imf is at this very moment embarking on so - called regional missions, in the benelux and nordic - baltic regions. from what i have seen so far, these fsaps are off to a good start, focussing

question of resolving the acute crises. work for the longer run must focus on the creation of an international rule system that prevents crises of this type from occurring. in the work that has begun on a new architecture for the financial system, measures of three kinds have been singled out as particularly important : more transparent accounting for financial institutions as well as for governments and central banks ; a greater involvement of private investors in crisis management ; and a reinforcement of the financial system. for work on the third category, there are in principle two different approaches or a combination of these. one involves tightening up the supervision of banks and the other the introduction of higher capital standards to raise the proportion of equity capital in the bank sector. my guess is that the future work to create a more functional banking system will be conducted along both these approaches. in the prevailing situation it is important that the international banks do not become unduly cautious. banks should take risks but their risk - taking should be properly managed. it would be unfortunate if more countries were to start imposing restrictions on capital exports. that would exacerbate the present state of affairs. similarly, it would be directly counterproductive to introduce some type of turnover tax, as proposed earlier by professor james tobin. that was tried out in sweden in the late 1980s and simply resulted in trading being transferred to other countries. even if agreements were to be reached between many countries, there would always be countries that refrained from joining the arrangement. moreover, the poorer liquidity that would accompany turnover taxes might actually impair the workings of some financial markets. new regulations may simply do more harm in the present situation. but the players in international financial markets do need to review their systems for evaluating risks. risk assessments based on historically determined correlations between different assets may be inadequate when earlier patterns are broken and the supply of liquidity changes. in the short run the problems in the global economy must be solved at their origins. via the international monetary fund, in certain situations the international community can contribute liquidity if the countries in question are prepared to take measures. it is, indeed, an enigma that the world ’ s second biggest economy, japan, has not managed, year after year, to tackle the problems in its banking system. economic development in japan is highly important, not least for other countries in the region. all observers are agreed that the problems in the banking sector must be rectified. fiscal measures are also called for. nor would i rule out the introduction, as