##herence in its approach to crisis resolution, in the shortcomings of its program design and conditionality, and most importantly, in the way political pressure from the major economies were allowed to influence the program content and decisions. in the thai case, our own experience with imf involvement was not dissimilar. dissatisfactions were recorded in the program design that exacerbated the liquidity problem into a near - systemic problem, in the overly tight stabilization policies based on too optimistic assumptions that led to serious economic dislocations, and also in the fund ’ s approach to financial sector restructuring and privatization which were flawed and alleged to benefit foreign interest. of course, different problems of different economies require different solutions, and it may not be fair to compare one program directly with another. but, for the most part, criticism of the fund on crisis prevention and crisis resolution centers mainly on four issues : ( 1 ) the quality and the effectiveness of its surveillance mechanism in preventing the crisis ; ( 2 ) the independence of its assessments and decisions on program design ; ( 3 ) the conditionality that it imposes ; and ( 4 ) the lack of a clear and predictable process in crisis resolution. as i noted earlier, many good solutions have been put forward. the fund has also responded positively to the criticisms by implementing many new and important initiatives. importantly, its work on crisis - prevention has become more pro - active. the article iv process has been strengthened with increased focus on debt sustainability. the fund ’ s works on standards and codes, fsap, and the inclusion of collective action clauses in bond contracts, are all important innovations and provide the global economy with new benchmarks. so far, i would say that improvements in fund surveillance, its policy advice, as well as the transparency it encourages have led to sound policies, better institutions, and overall greater flexibility in emerging markets. a big pay - off was evident last year when the improved economic resilience enabled emerging markets to cope better with the impact of the high oil price. but, definitely, more can be done. and the first point i want to make is that imf surveillance would be most useful for emerging markets if it strengthens its focus on helping members to better prepare for coping with the challenge of the next crisis. my view is that, with the improvements in economic fundamentals and policies that we are now seeing within emerging markets, there is now less likelihood than before that the next crisis, if it were to occur

the longer - term. in the meantime, we will probably continue to have to witness an intensification of the financial crisis. as mortgage - related assets deteriorate further, economic growth will inevitably slow down even more, along with the downside risks of financial and the economic outlook. with disheartened creditors and investors, access to capital markets as well as short - term funding markets become increasingly impaired, impeding any possibility of a sustained recovery in the securities and credit markets. ladies and gentlemen, global financial markets are now at a critical juncture. risk aversion across the system has risen to unprecedented levels, and an aggressive deleveraging process is under way. many financial institutions need to raise significantly more capital at a time when their ongoing earning power appears to have been permanently reduced. these dynamics will intensify the current global slowdown and have an impact although somewhat indirectly on emerging market economies, despite the relative strength of these countries ’ financial institutions. in response to the renewed tensions, the authorities of a number of countries have introduced a number of measures and initiatives to address the problems at both market and individual institution levels. this should eventually encourage private investors to re - enter the market and complete the deleveraging process. meanwhile, coordinated efforts have been strengthened to ensure adequate liquidity at an appropriate interest rate as inflationary pressure began to subside. although it remains uncertain when the current financial storm will end, these international co - operations if properly executed will undoubtedly speed up the resolution of this crisis and ultimately limit its economic and financial consequences worldwide. ladies and gentlemen, in this context, from an emerging market perspective, the question, therefore, goes way beyond just how to cope with the current turmoil, but reaches deep down into the direction of market development over the medium to longer term as well. within the realm of central banks, for example, the traditional science of monetary policy has so far been based on the idea that the central bank ’ s objective should be to maximize the economic well - being of the people in the country by minimizing the deviations of inflation from its optimal rate and the deviations of real economic activity from its so - called natural growth path. however, today it is clear that the central bank ’ s role in fostering financial stability is essential and this role will become more prominent in the world of increasing financial integration. experiences of the recent crises indicate that monitoring financial imbalances is crucial in preventing financial turmoil from occurring. it has long been