, will originate from imbalances within emerging market economies. on the contrary, imbalances now seem to be more of a challenge for the major economies with the financing now becoming a major component of the global capital flows. an unwinding of the imbalances could lead to economic slowdown and sudden changes in the financial conditions of the major economies, which, as the past episode of capital account crises shows, can create difficulties for emerging markets in terms of growth implications, abrupt reversals of capital flows and sudden stops. it is in this context that fund surveillance could help members to be more informed of the implications of such risks, and to assist members, through fund policy advice, on how best to prepare. in this respect, i have a view that the fund could do more in three areas. first, it should step up its surveillance of the major economies by providing frank and independent assessments. also, the briefings, papers, and analyses that the fund prepares on g7 economies and meetings could be shared more widely with other fund members. second, in the area of financial markets surveillance, a few things could also be done. the fund could produce and circulate monthly report on global financial markets to members focusing on the key financial flows to keep members informed of what the fund sees as the current trends and risks in financial markets. important in this context is the monitoring of activities or position - takings of large institutional players and hedge funds. also, it would be useful for members if the fund could develop its own in - house view of a benchmark risk scenario which then can be used, or shared with members, in stress - testing the vulnerabilities of economies to capital flow reversals. and third, in addition to the debt sustainability framework, the central focus of the fund ’ s surveillance in emerging markets should be the analyses of capital flows and capital account sustainability. in fact, a definitive framework for analyzing capital account sustainability would be most helpful for emerging market members in their own assessments of their vulnerabilities to capital flow reversals. i think this capital account sustainability framework is important, given the fund ’ s mandate on the balance of payments and the recent episode of capital account crises in emerging markets. the second point i want to raise is that the fund should look more positively at the progressing efforts by members to increase their own immunity against the risks of financial crisis and contagion by engaging in various self - insurance activities. these activities include ( 1 ) strengthening

and promoting neighborhood stabilization. a few of the emerging solutions highlighted at the event were : a national “ first - look ” property program, which gives nonprofits and municipalities the right of first refusal on repossessed properties to facilitate neighborhood stabilization ; new methods of municipal code enforcement ; and innovative land - banking strategies. we will be using these ideas and others to inform our community development efforts over the coming year. to ensure that we have access to more detailed data on mortgage and credit markets, the federal reserve system has created the risk assessment, data analysis, and research, or radar, data warehouse. this new platform will help inform our monetary policy, bank supervision and regulation, and community development. over the next two days, i understand that you will be hearing about policy - oriented research on the u. s. housing and mortgage markets – an area of first - order importance to policymakers. you will have the opportunity to discuss the current situation and the outlook for mortgage foreclosures, consider their consequences for neighborhoods, and evaluate efforts to mitigate foreclosures. also, you will learn results from various studies that have examined mortgage modifications and factors that have led to defaults. finally, you will consider the future of housing finance. all the papers on the conference program are of direct interest to policymakers and should lead to better - informed policy. i hope we can draw upon this information and the success of the more program to explore new and creative ways to address the foreclosure crisis. at the fed, we will continue to encourage further research, participate in discussions, and coordinate work among groups striving for sustainable homeownership and the recovery of housing markets.