i would go further. it seems to me that those rules should contemplate a private sector contribution only to the extent needed, so that countries can quickly regain access to private financial markets. in a recent article in financial times, martin wolf, commenting on emerging market economies, ended with these words that deserve our attention : “ optimists are not wrong : we do know how to make emerging market economies more seaworthy than they have been. but pessimists are also right : the turbulent global capital markets remain dangerous for the unprepared. those managing emerging market economies should be aware of the risks. they must understand, too, that they will receive only modest help from outside. the price of safety remains careful preparation and eternal vigilance. ” thank you very much for your attention.

“ normal ” or “ natural ” levels after a long period of exceptionally easy monetary policy. the reliance on “ measured ” policy moves, and the care taken to communicate the fed ’ s policy intentions, attests to the delicate situation in which the authorities now find themselves. heavy debt accumulation by households and increased leverage by financial firms raise the prospect of a different response to policy tightening than might earlier have been expected. growing suspicions as to the continued reliability of domestic measures of inflationary pressures ( “ gaps ” ) in an increasingly globalised real economy only add to the uncertainty. in the light of the globalisation process in the financial industry, a number of commentators have suggested the need for an international super - regulator. see eatwell and taylor ( 1998 ) and currie ( 1999 ). political realities, particularly but not exclusively in the united states, make this a non - starter for the foreseeable future. there are particular impediments to prudential authorities behaving as suggested above. first, and perhaps most important, they do not have a macroprudential culture. it is a big leap for supervisors, in large part lawyers and accountants by training, and used to evaluating the health of single institutions, to think systemically. shocking systems of simultaneous equations to see the effects on market clearing conditions is not their natural pastime. moreover, it is an even bigger leap for prudential authorities to be convinced that action is needed when the financial system seems healthy, and only the corporate and household sectors seem overextended. surely, they would argue, this is someone else ’ s responsibility. a second very practical concern is that, in most jurisdictions, the prudential authorities do not have the power to use prudential instruments in the way recommended. acquiring such rights would probably involve a long and difficult political process. consider, for example, the strong opposition already being mounted by the accounting profession and the tax authorities to the idea of forward - looking provisioning for expected losses. how the use of such instruments, effectively imposed from outside, might be reconciled with the current trend to relying more on financial firms ’ internal assessments of the risks they are bearing is a closely related question. third, there is the fallacy of composition problem referred to above. how could the prudential authorities convince individuals to behave in ways that seemed to conflict with their own best interests? they would have to be persuaded both that it was in the common good of all to do so,